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.
