Bear Stearns sold with Fed's help

NEW YORK, March 17 (UPI) -- J.P. Morgan's $2 a share purchase of troubled Bear Stearns over the weekend came with the aid of $30 billion in financing from the U.S. Federal Reserve.

The unusual move by the Fed means that if the value of the $30 billion of assets the Fed is financing declines, the Fed, not J.P. Morgan, accepts the loss, The Wall Street Journal reported. Bear Stearns, the fifth largest investment bank on Wall Street, found itself unable to meet its obligations late last week and J.P. Morgan stepped in, borrowing money from the Fed and lending it to Bear Stearns.

Some of Bear Stearns' investors were stunned by the sale, which, at a total of $236 million, was $28 a share less than the $30 per share listing of Bear Stearns stock on Friday on the New York Stock Exchange.

"The building is worth $8 a share," one Bear Stearns executive told the paper, as many wondered why the board did not chose a liquidation sale instead of a fire sale.

Bear Stearns Chief Executive Alan Schwartz said the sale "represents the best outcome for all of our constituencies based upon the current circumstances."