The NYT reports on the Fed, Bears Stearns valuation, and interventions.
The Fed, working closely with bank regulators and the Treasury Department, raced to complete the deal Sunday night in order to prevent investors from panicking on Monday about the ability of Bear Stearns to make good on billions of dollars in trading commitments.
In a potentially even bigger move, the Federal Reserve also announced its biggest commitment yet to lend money to struggling investment banks. The central bank said its new lending program would make money available to the 20 large investment banks that serve as “primary dealers” and trade Treasury securities directly with the Fed.
Much like a $200 billion loan program the Fed announced last Tuesday, this program will essentially allow the government to hold as collateral a wide variety of investments that include hard-to-sell securities backed by mortgages. But Fed officials told reporters on Sunday night that the new program would have no limit on the amount of money that can be borrowed.
Hedge Fund implode-meter for broker dealers insolvency issues (much less liquidity).
World Exchanges(MG link)
CNN money (MG link)
There certainly is a lot happening. Bear Stearns sold at $2/share. Another quarter point dropped on the interstate bankrate. Unlimited borrowing being authorized to ‘market participants’ and ‘primary dealers’ from the Fed.
How are reasonable arguments even in the running? I sure hope it works. The whiplash in other areas is sure to be wicked.