Mugged on Wall Street--How You and I Made J.P. Morgan Rich(Er)
Fed Takes Broad Action to Avert Financial Crisis Central Bank Backs Sale of Bear Stearns, Cuts Key Interest Rate, Extends New Credit
By Neil Irwin and David Cho Washington Post Staff Writers Monday, March 17, 2008; A01
The Federal Reserve took dramatic action on multiple fronts last night to avert a crisis of the global financial system, backing the acquisition of wounded investment firm Bear Stearns and increasing the flow of money to other banks squeezed for credit.
. . . As part of the deal, J.P. Morgan Chase, a major Wall Street bank, will buy Bear Stearns for a bargain-basement price, paying $2 a share for an institution that still plays a central role in executing financial transactions. Bear Stearns stock closed at $57 on Thursday and $30 on Friday. J.P. Morgan was unwilling to assume the risk of many of Bear Stearns's mortgage and other complicated assets, so the Federal Reserve agreed to take on the risk of about $30 billion worth of those investments.