The collapse of Bear Stearns was rapid and deadly. The 52 week high of Bear Stearns stock was $159.36 and today is worth $2-3.00. J.P. Morgan has offered to buy out Bear Stearns for $2.00 a share for a total of $236m. As of Friday Bear Stearns was worth $3.5b. Last January (2007) Bear was worth $20b. Oh how the mighty have fallen.
Watch the markets today and this week closely. Not where they start today but where they end on Thursday. Also note that two other major brokerages/banks report tomorrow, Goldman Sachs and Lehman Brothers, and Morgan Stanley reports on Wednesday.
To help facilitate the J.P. Morgan deal, the Federal Reserve is taking the extraordinary step of providing as much as $30 billion in financing for Bear Stearns's less-liquid assets, such as mortgage securities that the firm has been unable to sell, in what is believed to be the largest Fed advance on record to a single company. Fed officials wouldn't describe the exact financing terms or assets involved. But if those assets decline in value, the Fed would bear any loss, not J.P. Morgan.
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