JP Morgan has agreed tonight to buy Bear Stearns for a scant $2 a share, a bargain-basement price—stock closed at $30 a share—that demonstrates the urgency of staving off the collapse of the venerable investment bank and widespread panic in financial markets, the AP reports. The Bush administration and Federal Reserve have reportedly approved the all-stock sale, which was rushed today under federal oversight to avoid Stearns filing for bankruptcy, the New York Times reports.
Stearns, which lost 47% of its value on Friday, was under pressure to sell before markets opened tomorrow; a sticking point was how much risk JP Morgan was willing to take on, the Wall Street Journal reports. JP Morgan wanted some Bear Stearns assets—its prime brokerage business, which caters to hedge funds, is a hot item—but sources say that JP Morgan CEO James Dimon sought protection for exposure, and the Fed offered it. (More Bear Stearns stories.)
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