JPMorgan And The Fed

JPMorgan and *THE FED* are bailing out Bear Stearns.

Bear Stearns, facing a grave liquidity crisis, reached out to JPMorgan on Friday for a short-term financial lifeline and now faces the prospect of the end of its 85-year run as an independent investment bank.

With the support of the Federal Reserve Bank of New York, JPMorgan said in a statement that it had "agreed to provide secured funding to Bear Stearns, as necessary, for an initial period of up to 28 days."

For the next month, JPMorgan will work with Bear Stearns to reach a solution for its financing crisis. Options could include organizing permanent financing or, according to people briefed on the discussions, buying the bank for a discounted price.

"JPMorgan Chase is working closely with Bear Stearns on securing permanent financing or other alternatives for the company," JPMorgan said in its statement.

There was some discussion last week that The Fed was quietly hiring people to handle bank failures. Ladies and gentlemen, prepare for a life change.

[ UPDATE 3/15/2008 ]

JPMorgan buys Bear Stearns for TWO DOLLARS A SHARE!

Bear Stearns Cos. reached an agreement to sell itself to J.P. Morgan Chase & Co., as worries grew that failing to find a buyer for the beleaguered investment bank could cause the crisis of confidence
gripping Wall Street to worsen.

The deal calls for J.P. Morgan to pay $2 a share in a stock-swap transaction, with J.P. Morgan Chase exchanging 0.05473 share of its common stock for each Bear Stearns share. Both companies' boards have approved the transaction, which values Bear Stearns at just $236 million based on the number of shares outstanding as of Feb. 16. At Friday's close, Bear Stearns's stock-market value was about $3.54
billion. It finished at $30 a share in 4 p.m. New York Stock Exchange composite trading Friday.

Effective immediately, J.P. Morgan Chase is guaranteeing the trading obligations of Bear Stearns and its subsidiaries and is providing management oversight for its operations. The deal isn't subject to any
conditions, except shareholder approval. It is expected to close before the end of the second quarter.

DAMN!!!! It closed at $30/share and is brought at $2/share!