Posted on by glennm

This is shockingly unbelievable. JPMorgan bought legendary stock broker Bear Stearns & Co. over the weekend at a fire-sale price after a plunge in cash reserves at the latter last week.

Bear Stearns [had] weathered the vagaries of the markets for 85 years . . . only to meet its end in the rapidly unfolding credit crisis now afflicting the American economy. Reflecting Bear Stearns’s dire straits, JPMorgan agreed to pay just $236 million for the firm, a figure that includes the price of Bear’s soaring headquarters on Madison Avenue in Manhattan. At $2 a share, JPMorgan is buying Bear Stearns for a third of the price at which the troubled firm went public in 1985. Only a year ago, Bear’s shares fetched $170. The cut-rate price reflects deep misgivings about the firm’s prospects.

JPMorgan Acts to Buy Ailing Bear Stearns at Huge Discount [New York Times]. Then it turns out that the Federal Reserve Board had loaned JPMorgan $30 billion — yes, billion with a "B" — to do the deal and that Morgan has allocated $6 billion of that to defend shareholder class actions ("litigation costs") brought by screwed Bear Stearns common stockholders.

As Keith Olbermann remarked Monday evening, Bear Stearns survived two world wars, 12 recessions and the Great Depression, but the Bush Economy brought the legendary institution to its knees. Characteristically. the current Administration offers nothing to mortgage borrowers burdened by the subprime lending crisis but hands out billions in unauthorized, possibly illegal and plainly wrong funds for a private acquisition and bail-out. The lesson must be that if you are a Wall Street executive and golf at the Republican country club you can get cash whenever, wherever and in any amount you want, but if you work for a living and pay a mortgage you are completely on your own when foreclosure rates reach the highest in American history. What a lesson in equality from this "compassionate conservative"!