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Bear Stearns Racing Toward Selling Itself to JPMorgan ( Fed driving the deal before Asia Mkt opens)
New York Times ^ | March 16, 2008 | ANDREW ROSS SORKIN and LANDON THOMAS Jr.

Posted on 03/16/2008 3:37:09 PM PDT by Ernest_at_the_Beach

Bear Stearns was racing Sunday afternoon to sell itself to JPMorgan Chase for more than $2 billion, according to people involved in the talks. Meanwhile, Bear Stearns, whose solvency is in question, was also making preparations to file for bankruptcy protection as a backup plan should a deal not be reached, these people said.

A deal for Bear Stearns would end the independence of one of Wall Street’s most storied firms and help halt a sweeping panic that set in at the end of last week, causing Bear Stearns’s stock to swoon 47 percent on Friday. If an agreement is not reached and Bear Stearns files for bankruptcy, it could cause an even deeper global scare over the fate of the financial system.

The talks, which are being overseen by the Federal Reserve and the Treasury Department because of their potential effect on financial markets, are being rushed in the hopes of reaching a deal before stock markets open in Asia at 8 p.m. Eastern time.

(Excerpt) Read more at nytimes.com ...


TOPICS: Business/Economy; Front Page News; News/Current Events
KEYWORDS: bearstearns; economy; jpmorgan; subprime; subprimes; wallstreet
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1 posted on 03/16/2008 3:37:11 PM PDT by Ernest_at_the_Beach
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To: Ernest_at_the_Beach

Next time people complain about handouts, don’t forget this one.


2 posted on 03/16/2008 3:43:06 PM PDT by The_Republican (You know why Chelsea Clinton is so Ugly? Because Janet Reno is her Father! LOL! - Mac is Back!)
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To: Ernest_at_the_Beach

Well good luck...they have an hour and 14 mins.


3 posted on 03/16/2008 3:45:38 PM PDT by spyone
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To: Ernest_at_the_Beach

This can’t end well. I really do not want the Federal Reserve brokering buyouts of private sector companies.


4 posted on 03/16/2008 3:49:11 PM PDT by G.Love ( Romney '12)
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To: Ernest_at_the_Beach

JPMC is one of the few financial institutions fairly unscathed by the subprime mess. The question I ask is will they turn Bear Stearns around, or will Bear Stearns drag down Morgan too?


5 posted on 03/16/2008 3:50:06 PM PDT by kms61
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To: spyone

LOL - and gold is already up.


6 posted on 03/16/2008 3:53:33 PM PDT by cinives (On some planets what I do is considered normal.)
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To: Ernest_at_the_Beach

I guess on a lazy Sunday afternoon with nothin to do, you just get togehter with your buds at work, the mucky-mucks from a multi-billion dollar failing company, and some reps from the Fed gubmint with very deep pockets, and you buy out this injured gorilla with guarantees from da taxpayers, all in time for a late supper.

This blows my mind — I’ve never seen anything like it. These thinkgs usually take months.


7 posted on 03/16/2008 3:53:53 PM PDT by webschooner
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To: kms61

Is this a good move for Morgan? Would they have bought Bear Stearns without prodding by the Fed?


8 posted on 03/16/2008 3:54:04 PM PDT by G.Love ( Romney '12)
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To: G.Love

that’s a good question. One thing for certain, there’s no way for them to do all the due diligence that would ordinarily be part of a deal like this. Unless the government immunizes them somehow, I don’t see how this doesn’t end up in court as a shareholder lawsuit.


9 posted on 03/16/2008 4:00:02 PM PDT by kms61
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To: Ernest_at_the_Beach
See also a related (not same) thread: Bear Stearns Closes in on Deal To Sell Itself to J.P. Morgan.
10 posted on 03/16/2008 4:00:48 PM PDT by ThePythonicCow (By their false faith in Man as God, the left would destroy us. They call this faith change.)
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To: G.Love

There are pieces of Bear that Morgan can use. Don’t know if they’re worth $2 billion, tho.


11 posted on 03/16/2008 4:01:09 PM PDT by Eric in the Ozarks (ENERGY CRISIS made in Washington D. C.)
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To: G.Love
Is this a good move for Morgan? Would they have bought Bear Stearns without prodding by the Fed?

It is a great move by Morgan, because as a part of this deal, it appears that the federal government will assume most of the risk of the deal, while JP Morgan will get the assets.

12 posted on 03/16/2008 4:05:26 PM PDT by Vince Ferrer
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To: kms61

JPM almost bought Bear Stearns previously, has done alot of diligence. Bear Stearns building in mid-town is worth almost 1 billion, private brokerage is worth another billion, rest might be a wash. The Fed engineered the shut-down of LTCM in the ‘90’s as well.

Bear Stearns is the most exposed Wall Street firm in sub-prime/alt-A market. Very dependent on it. The reason they failed is an asset run by counter-parties last week. Nobody wants to leave assets in a bank that might go under, so there was a white-shoe run on the bank by it’s hedgie and PE customers. JPM is not in that position.


13 posted on 03/16/2008 4:06:19 PM PDT by usafsk ((Know what you're talking about before you dance the QWERTY waltz))
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To: Ernest_at_the_Beach

It’s done....$2 per share!!!!!!


14 posted on 03/16/2008 4:06:37 PM PDT by spyone
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To: Ernest_at_the_Beach

$2 PER FRIGGIN SHARE!!!!!


15 posted on 03/16/2008 4:07:42 PM PDT by spyone
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To: Ernest_at_the_Beach
JPMorgan has been balking at the deal in the absence of guarantees from the Federal Reserve that its liabilities would be limited, people involved in the talks said. JPMorgan was working with the Federal Reserve on Sunday afternoon to hash out exactly what liabilities would be guaranteed, said these people, who insisted on anonymity because they were not authorized to speak publicly about the talks.

Does this mean Joe taxpayer is taking a chance on the buyout? - tom

16 posted on 03/16/2008 4:07:43 PM PDT by Capt. Tom (Don't confuse the Bushies with the dumb Republicans - Capt. Tom)
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To: G.Love
This can’t end well. I really do not want the Federal Reserve brokering buyouts of private sector companies.

Honestly, it really is the best thing at this point. Financial markets are the foundation of free-market capitalism, but paradoxically are built on a completely artificial foundation which is necessarily constructed by government. Liquid money is an unnatural thing, incapable of existing without government, but capitalism couldn't function without it.

This is a situation where tremendous speed is necessary in order to prevent catastrophic effects on the financial markets, in which the painful consequences will be distributed without correlation to guilt. These paragons of capitalism -- JPM and Bear -- are heavily regulated entities to begin with. The normal legal process to arrange an acquisition of one by the other would involve months of negotiations, legal opinions, shareholder suits, regulatory approvals, and accounting work. What the government is doing by brokering this is enabling the firms to cut through virtually all of the red tape, to do what they want to do anyway, about a thousand times faster.

17 posted on 03/16/2008 4:08:46 PM PDT by GovernmentShrinker
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To: Ernest_at_the_Beach

At the start of the week BSC shares where $65...taken over at $2


18 posted on 03/16/2008 4:11:22 PM PDT by spyone
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To: spyone; NormsRevenge; Grampa Dave; SierraWasp; ThePythonicCow

Down from 170 last summer I think...WOW!


19 posted on 03/16/2008 4:12:17 PM PDT by Ernest_at_the_Beach (No Burkas for my Grandaughters!)
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To: The_Republican

It’s not clear that there will be any “handouts” here. And any guarantees that end up having to be paid by the taxpayers (and there might not be any, if all goes as hoped) would not be likely to exceed what the taxpayers would end up paying through other avenues, if the huge financial market disruption that would be caused by the unrescued failure of Bear, actually occurred. When dozens of smaller banks start going under as part of the ripple effect, millions of FDIC-insured account-holders will get their $100,000 from the taxpayer.


20 posted on 03/16/2008 4:14:50 PM PDT by GovernmentShrinker
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