The CEO of JPMorgan, James Dimon, agreed to pay $10 a share in stock (up from $2 last week) and to purchase 95 million new shares of Bear Stearns, giving JPMorgan an immediate 39 percent stake in the collapsed brokerage firm and paving the way to a likely deal closing on April 8. He also agree to absorb the losses (if any) of the riskiest $1 billion of $30 billion of Bear Stearns riskiest assets, leaving the NY Fed at risk of loss (or profit) of the remaining $29 billion. Last week's deal put the entire risk on the NY Fed. Dimon was also concerned about a large number of Bear Stearns employees defecting to his competitors.
This is like a falling out among pirates, but with better hygiene and grooming and less swordplay. |