Bear Stearns was the only major securities dealer that refused to participate in the bailout of Long-Term Capital Management, the epicenter of the last credit crunch in 1998.
This caused a lot of bad blood, as Bear didn't shoulder any of the capital costs associated with the bailout, but profited from the improved conditions in the marketplace. Wall Street viewed the firm as a "free rider."

Had the Fed acted earlier, say last week, to accept collateral from securities dealers, Bear Stearns would not have collapsed, JPMorgan wouldn't have been able to buy the entire firm for $2, and investors in Bear wouldn't have lost $70 billion.

The message to the market is undeniable: Do what the government tells you to do or else you'll pay, eventually.

Pubblicato il 18/3/2008 alle 8.19 nella rubrica Diario.

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