Fasten your seatbelts

The soft land­ing is get­ting bumpy! The US Fed­eral Reserve is man­ag­ing Bear Stearns’ port­fo­lio, accord­ing to Sun­day night’s New York Times. Sure, JPMor­gan chase bought Bear for about US$2 per share, but the Fed is prop­ping up the deal.

Bear Stearns traded for US$30 a share on 14 March 2008, accord­ing to this Bloomberg arti­cle.

Fed chair­man Ben Bernanke may be toss­ing money out of a heli­copter over Wall Street later this week. Accord­ing to the Asso­ci­ated Press, the Fed will announce will announce another round of rate cuts on Tuesday.

Henry M. Paul­son Jr., the cur­rent Trea­sury sec­re­tary, vig­or­ously endorsed the Fed’s res­cue efforts on Sun­day and made it clear he was much less wor­ried about the “moral haz­ard” of bail­ing out a Wall Street firm than he was about a chain reac­tion of defaults if Bear Stearns were to abruptly collapse.

“The right deci­sion here, I am con­vinced, was the deci­sion that the Fed made, which was to do things, work with mar­ket par­tic­i­pants to min­i­mize the dis­rup­tions,” Mr. Paul­son said on “This Week With George Stephanopou­los” on ABC.

Tagged as: economy, government, USA