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JP Morgan, Feds Bail Out Bear Stearns

The investment bank's liquidity crisis forces it to ask for emergency help

By Jim O'Neill,  Newser User

Posted Mar 14, 2008 9:25 AM CDT
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(Newser) – Bear Sterns has reached out to rival JP Morgan Chase and the Federal Reserve Bank of New York for emergency funding to reassure investors concerned about the struggling investment bank's deteriorating liquidity, the Wall Street Journal reports. The move is a startling indicator of how hard the subprime virus has hit US credit markets and financial firms.

JP Morgan and the Fed will provide short-term secured funding for up to 28 days, with JP Morgan saying it was working to find permanent or other alternative funding. Bear Stearns has seen its share price plummet 25% in the past month, worsening its capital concerns. “Our liquidity position in the last 24 hours had significantly deteriorated,” said Bear Stearns CEO Alan Schwartz.

The logo for Bear Stearns is shown at its corporate headquarters in New York, in this July 18, 2007 file photo. Bear Stearns Cos., the nation's fifth-largest investment bank, on Wednesday, Nov. 28, 2007 said it will cut 4 percent of its staff in further fallout from the summer's mortgage...
The logo for Bear Stearns is shown at its corporate headquarters in New York, in this July 18, 2007 file photo. Bear Stearns Cos., the nation's fifth-largest investment bank, on Wednesday, Nov. 28, 2007...   (AP Photo/Mark Lennihan, file)
A sign of above the entrance to Bear Stearns headquarters is seen in New York Tuesday, Jan. 8, 2008.
A sign of above the entrance to Bear Stearns headquarters is seen in New York Tuesday, Jan. 8, 2008.   (AP Photo/Jin Lee)
A woman holding an umbrella walks past the entrance of Bear Stearns headquarters, Wednesday, Jan. 9, 2008 in New York. Bear Stearns Cos. Chief Executive James Jimmy Cayne said Tuesday that he's stepping down, not long after Merrill Lynch & Co. CEO Stan O'Neal and Citigroup Inc.'s Chuck Prince...
A woman holding an umbrella walks past the entrance of Bear Stearns headquarters, Wednesday, Jan. 9, 2008 in New York. Bear Stearns Cos. Chief Executive James "Jimmy" Cayne said Tuesday that he's stepping...   (AP Photo/Jin Lee)
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COMMENTS
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Yes, Bear Stearns is having liquidity issues
Wall Street Journal

Is Bear Stearns doomed?
The Motley Fool

Bear Stearns plummets on insolvency fear
Bloomberg

Wall Street fears a big bank isin big trouble
Times (UK)

 
Wall Street • Bear Stearns • liquidity • subprime crisis • Federal Reserve Bank of New York • Alan Schwartz • JPMorgan Chase

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