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JP Morgan sweetens the deal
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I am of two minds at the news that JP Morgan has raised its bid for Bear Stearns from $2 a share to $10 a share.
On the one hand, it will help the deal go through, putting JP Morgan's balance sheet behind all of Bear's trade, which should go a long way to settle the markets. And the Fed leaned pretty heavily on Bear Stearns management to make a sweetheart deal to entice JPM in; that's not exactly fair.
On the other hand, failure should hurt; otherwise, the moral hazard problem is too great. And raising the price from $2 to $10 inches the needle a lot closer to "bailout".
On the one hand, it will help the deal go through, putting JP Morgan's balance sheet behind all of Bear's trade, which should go a long way to settle the markets. And the Fed leaned pretty heavily on Bear Stearns management to make a sweetheart deal to entice JPM in; that's not exactly fair.
On the other hand, failure should hurt; otherwise, the moral hazard problem is too great. And raising the price from $2 to $10 inches the needle a lot closer to "bailout".
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