JPMorgan to raise bid for Bear Stearns
The new deal that is being discussed is designed to assuage the concerns of Bear Stearns shareholders who have vowed to vote against the deal.
The Times adds that, "The Fed, which must approve any new deal, was balking at the new offer price on Sunday night after several days of frantic, secret negotiations, these people said. As a result, it was still possible the renegotiated deal might be postponed or collapse entirely, said these people, who were granted anonymity because of their confidentiality agreements."
If JPMorgan quintuples its offer to appease disgruntled shareholders in a company that can't survive on its own, it will be an outrage. The Fed has agreed to take on $30 billion worth of Bear Stearns' worst assets. If the company needs to be bailed out by the taxpayers, stockholders who put their money at risk buying shares should not receive anything. Two dollars per share was generous. The sum of $10 per share would not just be a bailout of Bear Stearns -- it would be a handout to people who lost money in the stock market.
If Bear Stearns shareholders think the company can do better in bankruptcy, they should go for it. Vote against the deal and see how that works out. But no taxpayer-subsidized bailout should include over $1 billion in cash for shareholders of a mismanaged company.
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Reader Comments (Page 1 of 1)
3-24-2008 @ 4:25AM
B. Harrison said...
Since Alan Greenspan and George Bush were such proponents of the "free market economy", how can they, in any way, support a taxpayer bailout of those who invested irresponsibly in this company.
Under the "free market economy" those who took the risk bear the results (profit or loss) of their investments. "Bankruptcy" is the only natural course of events to determine the value of Bear Stearns. JP MOrgan has not basis to get a windfall profit at taxpayer expenses.
3-24-2008 @ 7:29AM
Dan Barnett said...
Mr. Bissonnette, But the question of whether BSC is bankrupt or not is the issue isn't it? BSC was at $60 a couple of weeks ago & I can see shareholders being upset now they are told that Morgan is being Federally subsidized to buy at $2. If 60 was anywhere near a rational price & the management was not fraudulently misleading the public, then $2 is simply too cheap. Particularly since the US Treasury bears the risk.