Bear Stearns may be near the end of a long innings
www.chinaview.cn 2008-03-16 08:30:43   Print

    BEIJING, March 16 -- Bear Stearns Co's 85 years as an independent Wall Street firm may be coming to an end as JPMorgan Chase and Co considers buying the crippled company.

    Teetering on the brink of collapse from a lack of cash, Bear Stearns got emergency funding on Friday from the United States Federal Reserve and JPMorgan in the largest government bailout of a US securities firm.

    The move failed to avert a crisis of confidence among Bear Stearns' customers and shareholders, who drove the stock down a record 47 percent.

    After denying early last week that access to capital was at risk, Bear Stearns Chief Executive Officer Alan Schwartz said the company's cash position had "significantly deteriorated" by Friday.

    The Fed agreed to provide financing through JPMorgan for up to 28 days, the bank said in a statement.

    Insiders said JPMorgan, led by Chief Executive Officer Jamie Dimon, is now considering buying Bear Stearns, Bloomberg News reported.

    No agreement has been reached and it's possible no deal will be completed, said the people, who declined be identified because the discussions are confidential.

    A JPMorgan insider said the bank may also be interested in buying Bear Stearns' prime brokerage unit, which provides loans and processes trades for hedge funds.

    The Fed acted to prevent the failure of the second-biggest underwriter of US mortgage bonds and forestall a potential market panic as losses by banks and brokers reached US$195 billion and stocks plunged for a third day last week.

    "I don't think they can afford to let Bear go," said Charles Geisst, the author of "100 Years on Wall Street," referring to the Fed bailout. Bear Stearns, founded in 1923, acted in response to "market rumors" of a liquidity crisis, Schwartz, 57, said in a separate statement.

    (Source: Shanghai Daily)

Editor: Feng Tao
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