There has been much discussion about buyout of Bear Stearns by J.P. Morgan. CNBC has a video that pretty well sums up many people’s perception that the Fed showed preferential treatment towards Wall Street over the individual citizens amid the economic crisis. The media has a knack for revving up emotions for the sake of their ratings and I find its focus on the Bear Stearns deal especially unnerving. The media wants you to believe that the Fed negotiated the BSC deal in order to cover Wall Street’s ass, by using 30 billion dollars in your tax money to “bailout” BSC. When I see these reports I often find many small but significant details left out.
First and foremost, BSC was initially sold to J.P. Morgan at $2 per share, at the urging of the Fed. J.P. Morgan officially announced today to raise the bid to $10 in order to make the transaction smoother by gaining some shareholder support. Even then the 6 month stock price chart gives you a pretty good idea of how cheap BSC is being sold at; the stock price hovered near the hundred. Bear Stearns, its executives and employees are losing a majority of their wealth by going through with this deal. About 30% of the BSC is owned by Bear Stearns employees and I’d bet that no employee is happy about their investments and savings taking the huge dive evident in the charts.
