Bear Stearns on the Ropes
Friday, March 14, 2008 - 10:01 am
Good sleep might be the most precious commodity this weekend with one of the primary dealers caught swimming naked in the receding tide. This is the biggest challenge ever faced by the Plunge Protection Team.
JPMorgan Chase & Co on Friday said it, along with the Federal Reserve Bank of New York, agreed to provide secured funding to Bear Stearns, as necessary, for up to 28 days.
The Fed, through its discount window, will provide non-recourse, back-to-back financing to JPMorgan Chase, the commercial bank said. JPMorgan said it does not believe this transaction exposes its shareholders to any material risk.JPMorgan Chase also said it is working with Bear Stearns on securing permanent financing or other alternatives for the company.
Alan Schwartz, president and chief executive officer of Bear Stearns, said in a separate statement: "Bear Stearns has been the subject of a multitude of market rumors regarding our liquidity. We have tried to confront and dispel these rumors and parse fact from fiction."Amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated. We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations."
The rumors have been flying all week, and yesterday the JP Morgan rumor was making the rounds, I twittered it around 1PM as it seemed partially responsible for a spike in the S&P:
rumor spiked mkt-JPM saying will take all BSC credit risk... about 20 hours ago from web
This story has been a raging all week. The market open was looking decent until Faber came on television:
Here is Alan Schwartz’s interview from Wednesday...but we really want to see Jimmy Cayne. Preferably tarred and feathered outside his new $28.2 million apartment.
March 12th
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