JP Morgan (NYSE: JPM) revised its $2 offer for Bear Stearns (NYSE: BSC) up to $10. Bear now trades at $11.40. Someone may think that JPM or another entity may come in even higher.
The lesson here is that the Fed will negotiate with crippled financial institutions. It is bad business because it takes away the central bank’s dictatorial patina.
When the next disaster comes along, the Fed may not find it so easy to make an offer and stick to it. The precedent with Bear Stearns will prevent that
Douglas A. McIntyre