Feds try to bailout Bear Stearns with JP Morgan's help

[Ichingcarpenter]

Bear Stearns Cos. said Friday that it got short-term financing from the Federal Reserve and J.P. Morgan Chase after the brokerage firm's liquidity "deteriorated significantly" during the past 24 hours.
Bear shares slumped more than 40% on the news, to $34.19.


"The (Fed) Board voted unanimously to approve the arrangement announced by J.P. Morgan Chase and Bear Stearns this morning," the Fed said in its statement. "The Federal Reserve is monitoring market developments closely and will continue to provide liquidity as necessary to promote the orderly functioning of the financial system."

http://www.marketwatch.com/news/story/bear-gets-help-fed-jp/story.aspx?guid=%7BFB1471C5%2D8532%2D4893%2DB2A6%2D4869733CCD98%7D


http://www.marketwatch.com/news/story/fall-bear-stearns-shatters-vestiges/story.aspx?guid=%7B3291BE90%2D810A%2D410B%2D9608%2DC2A54F62D327%7D

Stock Market is down 200 points even with this help and these reports don't even
say how much money the feds poured into this firm.

[aquart]

1. NOBODY should lift a finger for Bear Stearns.

It is a criminal enterprise from top to bottom.

[Ichingcarpenter]

2. The bankers and the feds are trying to save their ass

for Greenspan's policies.


This really looks like a meltdown
considering the Feds and others poured $200 billion into
the financial markets this week.

[ayeshahaqqiqa]

3. Meanwhile, Mr. John "Bear" Stearns, a disabled vet, asks for money

to help him and his family--and the federal government turns a deaf ear.

[Ichingcarpenter]

5. The trickle down theory doesn't work

except to piss on the middle class and the poor.

[SoCalDem]

4. The trouble is this..

Even though there is some joy in the melting down of these companies, if you have a 401-k, you are going to feel the pain too.. :(

We've been playing with cyber-money for a long time, and sooner or later people start demanding proof that the money exists.. it doesn't

[Ichingcarpenter]

7. I got mine out right after the 2004 election with penalty

All I can say is thank god the plan for social security to
be tied to the stock market didn't pass. This doesn't look good
for the nation, however I believe the total meltdown will happen
before the election in the fall no matter what the Bush regime and the Feds
try to do, which will help the democrats.



Stock market is now 250 points down. BTW

[Karenina]

6. London traders told stop dealing with Bears

http://www.reuters.com/article/bondsNews/idUSL1439947820080314?sp=true

There's TROUBLE in River City! :woohoo:

[Ichingcarpenter]

8. Market is at -289 even with the feds help

As at yesterday's close, the 1st 5 months of this bear the Dow has averaged -2.88% per month.

The 1929-1932 bear averaged -2.84% per month over its duration. The Dow fell 91%.

[aquart]

13. WOW!

[Ichingcarpenter]

9. More breaking news on the bailout

WASHINGTON (MarketWatch) -- The Federal Reserve was able to supply funds to Bear Stearns Cos. by employing a little-used power under which the U.S. central bank can lend directly to non-bank financial institutions, Fed officials and experts said Friday.


Under "unusual and exigent circumstances," the Fed can loan to broker-dealers if credit is not available from other sources and if a firm's failure to obtain such credit would adversely affect the economy.

"J.P. Morgan is not liable if Bear Stearns defaults, so the Fed is looking to the collateral of Bear Stearns," said Lou Crandall, chief economist at Wrightson ICAP.


The size of the loan isn't certain, a Fed staffer said. The amount of credit provided by the Fed will depend on Bear Stearns' credit needs and the collateral on the company's balance sheet.


Under law, the Fed's board of governors was required to approve the Bear Stearns loan. The board vote was 4-0, with Fed Gov. Frederic Mishkin absent due to his travel schedule.

During every period of financial strain, including immediately following the Sept. 11, 2011, terror attacks, the Fed typically reminds financial markets that it has the power to lend to other financial institutions. But the Fed hasn't used the authority in decades
http://www.marketwatch.com/news/story/nuts-bolts-bear-stearns-bailout/story.aspx?guid=%7B94FE7863%2D2EC3%2D44F3%2D81AB%2DC55577ACE4DC%7D

This is big news if you are paying attention

[Ichingcarpenter]

11. This is the first time the Feds have done this for a non-bank institution

I searched and even though the article said decades ago, I can't find a record on it.

[TreasonousBastard]

10. Pretty much what they did when Penn Central went...

belly up, threatening to bring down the economy. They learned a long time ago that tightening money in such times was a major cause of the Depression.

Opening the discount window in a liquidity crisi is what the Fed is designed to do, and without it we'd have been fucked a long time ago. The major differnce now is how much debt we're all in, but blaming the Fed for trying to solve our problems is the wrong way to go.

[Selatius]

12. It sounds like they were trying to avoid a bank failure.

A lot of their imaginary paper money dried up, and some banks are seeing old-fashioned runs on the bank like Countrywide Financial.

[malaise]

14. The shit is about to hit the fan

and George has no where to go for a bail out.

[Ichingcarpenter]

16. Political contributions of Bear Stearns

Political contributions

James E. Cayne, Chairman and Chief Executive Officer of Bear Stearns,
is a Bush Pioneer having raised at least $100,000 for Bush
in the 2004 presidential election.

Bear Stearns gave $127,500 to federal candidates in the 2006 election
through its political action committee -
25% to Democrats and 75% to Republicans.

Other political campaign contributions:

P. Nicholas Hurtgen, Bush Pioneer, Texans for Public Justice, accessed August 2007.
Douglas R. Korn, Bush Pioneer, Texans for Public Justice, accessed August 2007.
Peter J. Murphy, Bush Pioneer, Texans for Public Justice, accessed August 2007.
Bear Stearns & Co., Inc Political Campaign Committee FKA Bear Stearns PCC], Candidate Contributions,

Texas for Public Justice is a slush fund to defend Tom Delay.

Congress.org: 2003-2004 Campaign Cycle: Total contributions: $66,500; and 2005-2006 Campaign Cycle: Total contributions: $79,000.

http://www.sourcewatch.org/index.php?title=Bear%2C_Stearns_%26_Co.%2C_Inc.

The company was founded in 1923 by Joseph Bear, Robert Stearns, and Harold Mayer as an equity trading house. It serves corporations, institutions, governments and individuals. The company's business includes corporate finance, mergers and acquisitions, institutional equities and fixed income sales, trading and research, private client services, derivatives, foreign exchange and futures sales and trading, asset management and custody services. Through Bear Stearns Securities Corp.,

[better tomorrow]

15. can somebody please help me with this question?

I don't know much about economics and am currently getting Social Security so am glad it isn't tied to the stock market, either.

But, my husband is getting ready to retire and he can start collecting his pension from a company he worked for over 29 years. It is an oil company. They told us that his money is in an annuity. This is a regular pension and not a 401K. Should we be worried? Are they tied to banks or stocks?

We have requested the estimate and it is taking a long time to come. I am getting somewhat worried.

Thanks for your honest answers. I guess the average American babyboomer doesn't know much about the economy either. I feel like John McCain!!!!

[Selatius]

18. Annuities are better than 401Ks in this regard. 401K is basically an investment in the stock market.

An annuity is more like an obligation someone has to you. In your case, your husband's company promised to pay a set amount to your father at a regular schedule when he takes retirement. Unless your husband's company goes bankrupt and is liquidated, you shouldn't have to worry. If you have a 401K, you'd likely have lost some value in it by now because of the shaky stock market.

[KamaAina]

17. Oh look! The Chinese are getting a piece of the action, too!

Bear Stearns had almost taken offense when skeptics challenged the firm's ability to weather the credit storm. After shocking the market with poor results in December, Sam Molinaro, the company's chief financial officer, hinted the worst was over.

Molinaro said "capital ratios ... are still very strong. We don't see a particular need to address that." He pointed to a $1 billion infusion from China's Citic Securities that was due to arrive this quarter.

Wait a minute -- does that mean the Fed is indirectly bailing out the Chinese? :eyes: