Bear Stearns (BSC) shocked Wall Street by selling itself Sunday for just $2/share to J.P. Morgan & Chase (JPM), the bank that stepped up Friday to bail it out in tandem with the New York Federal Reserve. In order to make the deal palatable, the Fed will assume risk on up to $30B of Bear Stearns' riskiest assets, including $20B of mortgage-backed securities. "
Despite recent events, the health of franchise and the prime brokerage and clearing business is in good shape," a JPM executive said Sunday. JPM does, however, assume some of Bear's large positions. It's unlikely other bidders will emerge, due to the degree of uncertainty surrounding Bear's positions.
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