Fed Cuts Discount Rate, Says Dealers May
Borrow (Update1)
By Scott Lanman
March 16 (Bloomberg) -- The Federal Reserve reduced the rate on direct loans
to commercial banks by a quarter-point and said it will allow primary dealers to
borrow at the rate in exchange for a ``broad range'' of investment-grade
collateral.
The central bank, in a statement today in Washington, also extended the
maximum term of discount-window loans to 90 days from 30 days. The Fed approved
the financing arrangement announced by JPMorgan Chase & Co. and Bear Stearns
Cos. JPMorgan separately agreed to buy Bear Stearns for about $2 a share.
Fed Chairman Ben S. Bernanke is
stepping up efforts to keep strains in financial markets from spiraling into a
full-blown meltdown. Last week the central bank agreed to emergency loans to a
non-bank, Bear Stearns, for the first time since the 1960s. Fed officials also
announced a program to swap $200 billion in Treasuries for debt including
mortgage-backed securities.
The Fed lowered the discount rate to 3.25 percent from 3.5 percent, narrowing
the spread with the federal funds rate to a quarter point from a half point.
>From tomorrow, primary dealers will be able to borrow at the rate under a new
lending facility, to be in place for at least six months, the Fed said.
The actions are ``designed to bolster market liquidity and promote orderly
market functioning,'' the Fed said. ``Liquid, well-functioning markets are
essential for the promotion of economic growth.''
Investors expect the Fed to lower its benchmark rate by as
much as a full percentage point, to 2 percent, when policy makers meet March 18.
That would exceed the 0.75-point emergency reduction on Jan. 22, which is the
largest cut since the overnight interbank lending rate became the main tool of
monetary policy about two decades ago
----- Original Message -----
Sent: Sunday, March 16, 2008 7:36
PM
Subject: Re: [RT] TWO BUCKS a share!!!
JPMorgan Acts to Buy Ailing Bear Stearns at Huge Discount
Things are very serious
----- Original Message -----
Sent: Monday, March 17, 2008 10:27
AM
Subject: [RT] TWO BUCKS a share!!!
JPMorgan Acts to Buy Ailing Bear Stearns at Huge Discount
JPMorgan Acts to Buy Ailing Bear Stearns at Huge Discount
Published: March 16, 2008
Bear Stearns, facing collapse because of the
mortgage crisis, agreed Sunday evening to be bought by
JPMorgan Chase for a bargain-basement price of less
than $250 million, the two companies announced.
The all-stock deal values Bear Stearns at about $2 a share, based on
JPMorgan?s closing stock price on Friday, the companies said. In contrast,
shares of Bear Stearns, which fell $27 on Friday, closed at $30.
A deal for Bear Stearns would end the independence of one of Wall
Street?s most storied firms and help halt a sweeping panic that set in at
the end of last week, causing Bear Stearns?s stock to swoon 47 percent on
Friday.
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