JPMorgan To Sweeten The Honey Pot

This morning brought news of a refinement of the JPMorgan/Bear Stearns deal. Evidently, Bear Stearns stockholders aren’t happy about the $2/share deal, and want something better. Wouldn’t we all.

What will be interesting is whether the Fed accepts the deal or not. I favored the original deal, but the new deal appears to put a fairer price on the stock, which was trading pre-market at about $9.15.

The Feds don’t want this to appear to be a stockholder bailout. I don’t think $10/share will make that appearance (at less than 1/3 the price of the stock prior to the original deal announcement). However, if a fair price is doable by JPMorgan, one has to wonder if the Fed needs to provide further guarantees to support the deal. I remain convinced the market should be able to handle itself and discipline itself without the Fed committing taxpayer dollars to prop up failing businesses.

A nice outcome would be the deal goes through and the Fed backs out. We can only hope.

About the Author

Mr. Smith is the Publisher of The Conservative Reader. He is Partner/Owner of Ambrosia Web Technology as well as a Systems Architect for Wells Fargo. Art hold a degree in Computer Science from Drake University in Des Moines, Iowa, and is a political blogger at the Des Moines Register. Art's views are purely his own and do not necessarily reflect the views of Wells Fargo.

 

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