Economics Topics
Economics Topics
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Bear Sterns
The Federal Reserve's moves to prop up Bear Stearns Cos. will come to be seen as "the worst policy mistake in a generation," [said] the former head of monetary affairs at the Fed. The action is comparable to "the great contraction" of the 1930s ...
Reinhart
The Federal Reserve’s moves to prop up Bear Stearns Cos. will come to be seen as “the ...
From Bloomberg: Volcker Says Fed's Bear Loan Stretches Legal Power
``The Federal Reserve has judged it necessary to take actions that extend to the very edge of its lawful and implied powers, transcending in the process certain long-embedded ...
The latest evidence of the Federal Reserve breaking from its usual practices to support the sale of Bear Stearns to J.P. Morgan Chase: The central bank has agreed to temporarily relax certain restrictions on transactions between banks and their affiliates and ease regulatory capital requirements to facilitate ...
"We judged that a sudden, disorderly failure of Bear would have brought with it unpredictable but severe consequences for the functioning of the broader financial system and the broader ...
The WSJ discusses the Fed's bailout of Bear Stearns. It reports that the Fed wanted to keep the purchase price down as a way of preventing a problem of moral hazard, in which the Fed would be rewarding the company's stockholders and managers for taking big risks and losing. ...
The $29 billion credit extension is supported by assets that were valued at $30 billion by Bear Stearns, which valued the assets at market value on March 14.
'Capital is not synonymous with liquidity.'
Christopher Cox, SEC
[Cox] said that Bear Stearns was adequately capitalized "at all times" during March 10 to 17, "up to and including the time of its agreement to be acquired by ...
The Federal Reserve Bank of New York, and the chief executives of J.P. Morgan and Bear Stearns, offered their take today on the $30 billion loan agreement to support the sale of Bear Stearns. J.P. Morgan will take the first $1 billion in losses, leaving the government on the hook ...
Following is an overview of the portfolio supporting the loan to be extended by the Federal Reserve in connection with the proposed acquisition of Bear Stearns by JPMorgan Chase.
The $29 billion credit extension is supported by assets that were valued ...
In an annex to testimony today before the Senate Banking Committee, New York Fed President Timothy Geithner provided the most detailed information yet of the portfolio backing the Bear Stearns loan to J.P. Morgan.
I’ve spent the past week being pissed off at all the people who were pissed off about the so-called “bailout” of Bear Stearns. In the light of ...
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Bear Stearns "bailout" for taxpayers [4:38 -9:42] The prospect of a depression [10:26-14:38]The idea is that if taxpayers are going to cover the downside, then they ought to have a share of any profits on the upside.
Last week, JPMorgan was going to pay $2/share for Bear, Stearns, with any loss absorbed by the Fed (and thus by taxpayers). Now JPMorgan is going to pay $10/share.
This new offer shows what a lowball offer $2/share was. The offer just jumped 500%! This ...
Unbelievable. Five years after ...
Former Federal Reserve chairman Paul Volker had some interesting comments on the current financial crisis on last night’s Charlie Rose show. The headline is his musing over whether loan guarantees and other “extreme measures” are a proper role for the ...
"The Federal Reserve has taken extraordinary emergency measures in response to the current financial turmoil. Tonight, I spoke with Paul Volcker, former Fed chairman and one of the most respected figures on the economy, in an exclusive interview. Here is what he had to say about the collapse of Bear ...
Would a bankruptcy have been better for Bear than a $2/share sale? We don't know. But I think a comment made by Alan Blinder, the noted Princeton economist, on the News Hour with Jim Lehrer this evening is telling precisely because it was wrong.
Blinder noted that ...
The collapse of Bear Stearns prompted the Fed to once again cut interest rates. Commentator and economist Andrew Samwick says whether you call it a bailout or a rescue, all Americans have a ...
The Fed's agreement to buy up to $30 billion in troubled Bear Stearns mortgage bonds may have saved JPMorgan Chase from a big writedown, according to senior executives involved in the transaction. Ultimately, it enabled a deal to be done even as ...
...about the Fed's role in the buyout of Bear Stearns by JPMorgan, let it be this article by Greg Ip in the Wall Street Journal. An excerpt:
In some ways, the initiatives better equip the Fed to help a financial system that has changed drastically from one based on ...
CR quotes part of the following; I have included the complete exchange between Guy and Mike.
Guy Moszkowski - Merrill Lynch - Analyst
Yes, fair enough, no, I'm just ...
And by the way, on the Bear Stearns deal -- what does it say about reputation as an asset when a $150 per share company (which is what it was this time last year) can get bought for $2 a share. When the death spiral hits, reputation and other ...
For those that missed the call, the WSJ has the transcript this morning. Here is the presentation material.
There is some good detail.
Guy Moszkowski - Merrill Lynch - Analyst
Okay, so ...
The Fed's extraordinary step in propping up Bear Stearns, followed by Morgan Stanley's purchase of the company at a fire-sale price, has everyone reeling. But for Credit Slipsters there's an odd little irony worth noting: Why didn't the Bear file for Chapter 11?
In the be-careful-what-you-wish-for category, the Wall ...
Anyone get a great night sleep?
Not me. I kept waking up, mind racing, thinking about what all this means going forward.
I have Kudlow & Co. tonite, and Morning Call on Fed day, and I always like to bring some ideas that are not the usual clich??d blahblahblah. ...
Not all investors are expected to be pleased with the deal. A conference call with investors and analysts on Sunday night was broken up when a Bear Stearns shareholder sought an explanation of why he would be better off approving this transaction rather than seeing Bear Stearns file for a Chapter 11 bankruptcy.
The JPMorgan ...
Bear Stearns was sold to JP Morgan in an all stock transaction valuation at a pitiful $2 a share (having traded at $30 on Friday) - a scenario that spooked global market early this morning, with Asian markets hitting a two-months low. The Nikkei was down 4.2%, as the ...
This is part three in a series of posts relating to this weekend's sale of Bear Stearns to JPMorgan and the Fed's role in the matter. (First post, second post)
The previous post highlighted a few of the reasons that some will be cynical about what happened tonight. ...
The 1.2 million-square-foot, 45-story structure built in 2001 ...
J.P. Morgan Chase agreed to buy Bear Stearns for $2 a share in a stock-swap transaction, people familiar with the matter say. J.P. Morgan will exchange 0.05473 shares of its common ...
People familiar with the discussions said all sides were pushing hard to complete an agreement before financial markets in Asia open for Monday trading.
... the company is likely to fetch considerably less ...
Department heads at Bear Stearns met with officials at J.C. Flowers and JPMorgan Chase Saturday afternoon ...
... potential bidders for Bear have been narrowed to ... J.C. Flowers and JPMorgan Chase
... bankers have now come to the conclusion that a deal must be ...
The Fed’s bailout of Wall Street investment bank Bear Stearns has, unsurprisingly, been discussed in terms of the domino theory. A more appropriate metaphor is The Wonderful One-Hoss Shay . This was a carriage constructed on the theory that a system always fails at its weakest spot.
The Federal Reserve’s decision to invoke a Depression-era law so that it could lend to Bear Stearns Cos. shows how seriously it believes the financial system is at risk.
Since last August the Fed has used both rate cuts and creative steps to infuse cash into the banking system and ...
Maybe it thought so, when it was taking on too many risky assets over the last few years, encouraged by previous episodes of inflationary policy. The Fed wants to give that impression too, to reassure investors--and middle class pension-holders especially--spooked by the prospect of a massive sell-off of assets, ...
The NYT told readers why the Fed had to use tens of billion of taxpayer dollars to keep Bear Stearns in business. It explained that letting the bank go under would lead to a chain reaction of collapses throughout the financial system.
This is not true. The Fed could have ...
The story discusses how Bear Stearns, JPMorgan and the Fed regulators ...
So, those liquidity rumors? Turns out they were true - or, at the very least, self-fulfilling. The official statement from Bear Stearns CEO Alan Schwartz:
Bear Stearns has been the subject of a multitude of market rumors regarding our liquidity. We have tried to confront and dispel these rumors and ...