In a rare Sunday move when the financial markets are closed, commercial bank J.P. Morgan Chase buys troubled investment bank Bear Stearns for 236,200,000 “dollars” —approximately two “dollars” per share. To finance the arrangement, the privately owned Federal Reserve (central) Bank of New York, creates the Maiden Lane limited liability corporation (LLC) to provide 30,000,000,000 “dollars” to finance the acquisition. Just the previous week Chief Executive Officer Alan Schwartz, of BS, stated in a CNBC interview that his bank was able to pay its expenses; two days later that assessment was changed. BS stock lost 95% of its value in the previous three months.
Also the Bernanke Doctrine continues: The Federal Reserve (central) Bank of New York creates the Primary Dealer Credit Facility to provide overnight credit to the nation’s troubled remaining investment banks, something it has never before done.
NOTE: And then there were four.
[added 3/23/2024] Thanks to Jim Lorenz, Freedom’s Phoenix and Chuck McGlawn for this entry.
Subsequent Events:
References:
Alan Zibel and Jeremy Herron, “Bear Stearns Bailout Could Be Tip of Iceberg,” Orange County (California) Register, 18 March 2008, News:15, 18.
“Paulson Defends Rescue,” Orange County (California) Register, 18 March 2008, News:3.
“Bear Stearns Downfall Could Be the Latest Domino,” Orange County (California) Register, 18 March 2008, News:18,
FRB: Press Release–Federal Reserve on Sunday announced two initiatives designed to bolster market liquidity
www.federalreserve.gov/newsevents/press/monetary/20150316/a.htm
Maiden Lane I – Federal Reserve Bank of New York
www.ny.frb.org/markets/maidenlane.html
Subprime crisis impact timeline
en.wikipedia.org/wiki/Subprime_crisis_impact_timeline
http://unpan1.sn.org/intradoc/Groups/public/Documents/apcity/unpan033507.pdf
unpan1.sn.org/intradoc/Groups/public/Documents/apcity/unpan033507.pdf
Bear Stearns – Wikipedia, the free encyclopedia
en.wikipedia.org/wiki/Bear_Stearns
CBS News Timeline: U.S. Credit Crunch & Financial Failures Follow Subprime Mortgage Crisis
wjz.com/business/credit.crisis.timeline.2.8186/99.html
Financial crisis of 2007-2009 – Wikipedia, the free encyclopedia
https://en.wikipedia.org/wiki/2007%E2%80%932008_financial_crisis
A History of the Panic of 2008
www.freedomworks.org/sploads/crisis.pdf
Giant Investment Banks Grasp for Government Safety Net
docshare.tips/giant-investment-banks-grasp-for-government-safety-net_57713749b6d87fed528b87a5.html
Timeline of the United States housing bubble – Wikipedia, the free encyclopedia
en.wikipedia.org/wiki/Timeline_of_the_United_States_housing_bubble
Subprime crisis impact timeline- Wikipedia, the free encyclopedia
en.wikipedia.org/wiki/Subprime_crisis_impact_timeline
Primary Dealer Credit Facility
www.ny.frb.org/markets/PDCF.html
The Federal Reserve’s Primary Dealer Credit Facility
www.ny.frb.org/newsevents/news/research/2015/rp090903.html
A Year in Bank Supervision: 2008 and a Few of Its Lessons
www.fdic.gov/regulations/examinations/supervisory/insights/sissm09/bank_Supervision.html
Current U.s. National Debt:
