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Considering that members of JP Morgan are on the board for the Federal Reserve, its a conflict of interest, and considering that guarantees add value to any deal, and liability for those doing the guaranteeing, it put the US tax payers on the hook if the the loan defaults.
Doesn't Bank of America have a couple members too? That's why the Countrywide sale wasn't contested?
Doesn't Bank of America have a couple members too? That's why the Countrywide sale wasn't contested?
Duh...I thought it was run by the government...duh....
Quote:
If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.
I know, it makes me sick. I love watching Ron Paul "talk" to Bernanke though...it makes me feel better that at least someone still cares enough about it.
Doesn't Bank of America have a couple members too? That's why the Countrywide sale wasn't contested?
What I'm surprised about, is the fact that no one who has bought stock in Bear Stearns in the days prior to the "fire sale" price set at $2.00, has filed a class action lawsuit.. (I'm sure one would be coming)... After all, if I paid $50 for the stock just days prior to the Feds, determining that $2 was its value, then someone, somewhere, should have gotten involved in stating that either, $50 was to high, or $2 to low.
I think that some of us are seeing things through heavily ideological glasses. If you ask some BearStearns employees, they would rather have been allowed to go bankrupt. If so, their shares might (arguably) have been worth more than what JPMorgan paid ($10).
The Fed didn't bailout BearStearns. They facilitated a rescue by JPMorgan of an entity whose bankruptcy might have hurt many, many innocent people. Who here would rather have seen Bear go bankrupt?
A "bailout" is any providence beyond what the market itself would have provided to Bear Stearns. If the shares go for $5 a pop, and their actual market value is less, then a bailout took place. It's not quite that straightforward in this case, due to the triangular relationship between JP Morgan Chase, BS, and the Fed, but the principle is the same.
So what exactly was the actual market value of Bear, on a per share basis? Less than $10 per share? How do you know? How do you know that its actual market value, after bankruptcy proceedings, might not have been greater?
I think that some of us are seeing things through heavily ideological glasses. If you ask some BearStearns employees, they would rather have been allowed to go bankrupt. If so, their shares might (arguably) have been worth more than what JPMorgan paid ($10).
The Fed didn't bailout BearStearns. They facilitated a rescue by JPMorgan of an entity whose bankruptcy might have hurt many, many innocent people. Who here would rather have seen Bear go bankrupt?
Bankruptcy would have allowed the stock to be frozen at a value, so that Bear Stearns could have been able to re-organize. Bear Stearns was in no danger of going out of business. It had trillions of dollars in assets, (not an exageration).. What it did was save the Bankruptcy courts a nightmare, trying to figure out the value.
To me, Bear Stearns, the stock holders, and the tax payers would have been better off if Bear Stearns would have gone Bankrupt to allow the reoganization.
Just because they go bankrupt, does not mean they are worthless, or go out of business, it simply means that they need to pause debt expenses to allow a re-organization. Thats what should have happened.
So what exactly was the actual market value of Bear, on a per share basis? Less than $10 per share? How do you know? How do you know that its actual market value, after bankruptcy proceedings, might not have been greater?
Many people believe that bankruptcy = $0 value but as you pointed out, that is not the case. Many companies come out of bankruptcy (Kmart, USAir for example) much stronger then when they went in.
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