As predicted yesterday, JPM bails out Bear Stearns at a price approximating bankruptcy under heavy pressure on both parties by the Fed which, rightly, did not want to see how Bear defaulting against (hundreds/thousands?) of counterparties would play out. The remarkable part of the transaction: Fed is guaranteeing against losses of $30B of Bear MBS so the taxpayer will ultimately take a hit here.

Posted on March 17, 2008 and filed under Finance.