Ben Bernanke, a Nigerian Who is Actually True to His Word

CNN Money is reporting:

The Fed’s agreement to buy up to $30 billion in troubled Bear Stearns mortgage bonds may have saved JPMorgan Chase from a big writedown, according to senior executives involved in the transaction. Ultimately, it enabled a deal to be done even as alternatives rapidly dried up.

JPMorgan (JPM, Fortune 500) executives initially decided to pass on a purchase of Bear Stearns this past weekend, Bear execs said, largely because of the risks tied to Bear’s mortgage portfolios. They changed their minds after the Fed agreed to pony up $30 billion in so-called nonrecourse loans – agreements that transfer the risk of Bear’s bad mortgage bets to U.S. taxpayers. The Fed’s decision paved the way for the Sunday evening deal that put Bear in JPMorgan’s hands for $2 a share, a 93% discount to Friday’s closing price.

Here’s how I see it… the Fed gave a huge present to both the Bear shareholders and to JPM. Bear shareholders got $2 a share… which may not seem like much when the shares were trading at seventy times that a year ago, but if I had to guess, when all is said and done, it will turn out that the company’s value was negative. And JPM get’s the money to buy Bear Stearns.

Memo to Ben Bernanke: when the next stone is ready to hit the water (Lehman?), give me the money and I’ll buy it. Thanks dude. (BTW… I’ll be on the road so leave a message in my yahoo account. But don’t worry, I’m interested. Just make sure you give me the money first.)

But honestly, I don’t expect it at this point. All the free money going around is going to the folks who are already playing. What does a guy like me have to do to get free money from the Fed? Start trying to sell squirrel carcasses as filet mignon?

BTW… this post, like many DVDs, has an alternate ending: Who said those e-mails from people promising to wire a lot of money into your account in exchange for little or no work are all scams? At least for the big banks, here’s an instance where it really works out as promised, no matter how ludicrous it sounds.