JP Morgan completed its government-subsidized takeover of Bear Stearns, the Wall Street bank that lost its shirt to the mortgage meltdown. JP Morgan received a sweetheart deal from the fed, who guaranteed nearly $30 billion worth of Bear Stearn’s most dreadful mortgage-based liabilities in order to save the bank from complete implosion.
From Reuters on the takeover:
Weakened by its massive exposure to mortgage markets and the embarrassing blow-up of two of its hedge funds, Bear was driven to the brink of bankruptcy in March by traders who drained about $17 billion of the firm’s cash in a matter of days.
Federal officials, worried a Bear bankruptcy would drag the rest of the markets down with it, strong-armed the bank to accept JPMorgan’s $2-a-share offer, backed by a Federal Reserve bailout of $30 billion in Bear assets.
JPMorgan now faces many significant and some unknown risks. Dimon disclosed this month that the cost of shedding Bear assets, litigation expenses and other merger-related costs would soar to $9 billion from an earlier rough guess of $6 billion.
Last 3 posts by Morgan
- Subprime Bananas - June 28th, 2009
- Roubini: No confidence in government exit strategy - June 24th, 2009
- Goldman bonuses largest in firm's 140-year history - June 21st, 2009
Related posts:
Loading ...