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.