Bear Stearns: Sold For Just $2 A Share - The Bank Worth $140bn Last Week

[Purveyor]

America's fifth largest bank last night became the biggest casualty so far of the global credit crunch - sold off to a rival at a knockdown $2 a share, a discount of 94% on last week when it was valued at $140bn.

The board of Bear Stearns bank approved the buyout by JP Morgan Chase for $236m after a weekend of frantic negotiations. Had the deal not been done, the bank would almost certainly have gone bankrupt.

Last night the US Federal Reserve cut the rate at which it lends money to banks and made more money available for them to secure short term loans.

George Bush is to meet the chairman of the Federal Reserve Paul Bernanke and the US treasury secretary Henry Paulson today. Paulson said: "The government is prepared to do what it takes to maintain the stability of our financial system. That's our priority."

To Democrats, though, Bush is not doing enough to help. "We're in the most serious economic problem we've been in in a very long time. The president's hands-off attitude is reminiscent of Herbert Hoover in 1929, in 1930," said Senator Charles Schumer, a New York Democrat.

---eoe---

http://www.guardian.co.uk/business/2008/mar/17/jpmorgan.useconomy1

[Pierre.Suave]

1. This is going to suck

thats for sure...

[Vincardog]

2. Why are American taxpayers bailing out an Investment Bank? They exempted themselves from the

banking regulations so they could make exorbitant "profits" which they refused to pay taxes on.

[tabatha]

3. Yes, and the taxpayers themselves don't get any help

with bankruptcy.

[Kittycat]

4. Bush must have friends at JPMorgan.

The building on Madison alone has been valued at 4x the purchase price of the entire company.

[Amonester]

7. Hint: CEOs weRe (still R) big cuckoo banana's campaign...

contributor$

What else is new?

[AdHocSolver]

9. Because the thieves have friends in high places. n/t

[bicentennial_baby]

5. Welcome to the suck

x(

:shrug: It is what it is.

[HuffleClaw]

6. typical that a republican administration would save the rich company

while letting those the rich company preyed upon to fend for themselves

[AdHocSolver]

8. The U.S. financial system is one big Ponzi scheme. It is SUPPOSED to work this way.

Just as with Enron, the supreme model for how the scheme works, you inflate the value of the stock through imaginative bookkeeping. The suckers throw lots of money at the company. The insiders, who make sure they own lots of shares purchased early on at a very low price, see the stock price go up as new buyers drive the stock price up with their purchases.

When it becomes apparent to the insiders that the number of new buyers is slowing down, or the Ponzi scheme is about to be exposed, for example, an honest audit of the company's financial ledger is about to occur, they sell out to the latest investors for huge "capital gains" profits. (Of course, they have been paying themselves huge salaries and bonuses all along for making the company so "successful".)

After the truth comes out and the stock value collapses, if the perpetrators are clever enough and lucky, they buy back the stock that they sold at an inflated price for mere pennies on the dollar and start the scam over again. In Enron's case, they got exposed and prosecuted. However, that rarely happens. There is little doubt that many of the people who "invested" in Bear Stearns also have "investments" in JPMorgan. The interlocked nature of these corporations is accomplished through holdings in multiple "dummy" corporations. (This is how the insiders at Enron worked the system.)

If you understand how the U.S. financial system works, and understand why FDR put government regulations in place on business, such as the Glass-Steagall Act, then what is happening now becomes easily understood. Deregulation of business, as exmplified by repeal of Glass-Steagal (which happened, by the way, under Clinton) made the schemes and financial meltdown we are seeing today, not merely possible, but INEVITABLE. The collapse and repurchase of assets by the insiders is part of the scheme.

The government bailout of these failed corporations is part of the scheme to steal your assets. The reconstituted financial corporations (under whatever name or apparent ownership) is merely returning the scam to the original perpetrators.

[AdHocSolver]

10. Both the $140 billion dollar figure and the $2 a share figure are imaginary numbers.

The Bear Stearns corporation was NOT worth $140 billion last week. Their financial books were cooked to show that value. The true value was far less than that. And the stock price, like any house price, is no more and no less than whatever people are willing to pay for it.

The $2 per share that JPMorgan is paying is not enough to prop up Bear Stearns. It is another way for the insiders to maintain control, and make profit from, the company. It is the injection of billions of our tax dollars that is propping up the company, and JPMorgan is going to be the sole benefactor to profit from that largesse with your tax dollars.

[cutlassmama]

11. Not surprised at all. Why should this day be any different from any

other day...