In a bold and stunning move, J.P. Morgan Chase & Co. and the Federal Reserve Bank of New York stepped in to provide Bear Stearns Cos. with funds to bolster the beleaguered investment bank amid persistent concerns about its liquidity. Bear Stearns has been trying to reassure the markets that its financial position was solid, but it was ultimately forced to seek help.
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J.P. Morgan and the New York Fed will provide Bear Stearns with secured funding for an initial period of up to 28 days. Through its discount window, the Fed will provide nonrecourse, back-to-back financing to J.P. Morgan, which doesn't believe the effort "exposes its shareholders to any material risk." J.P. Morgan also said it's working with Bear to secure permanent financing or "other alternatives" for the brokerage firm.
News of the bailout, however, has done little to help Bear's share price. The investment bank's stock fell 50% to about $28 a share in early trading. That is on top of the 38% the shares have dropped so far this year.
News of the injection -- not to mention the depressed shares -- is sure to raise takeover talk.
Additional coverage will come later in The Daily Deal and on TheDeal.com. - Donna Block
See Bear Stearns press release via Business Wire
See press release from J.P. Morgan
See story from Reuters
See story from Dealbook
