NEW YORK, March 18 (UPI) -- The U.S. Federal Reserve's move to help finance the purchase of Bear Stearns left investors split on whether it was the right move.
The Fed lent J.P. Morgan Chase and Co. $30 billion, which it lent to Bear Stearns before Morgan Chase purchased Bear Stearns at a fire-sale price of $356 million.
The Fed took the risks, standing to loose if the value of the bank's assets decline.
"They stand committed to protect the system," Richard S. Fuld Jr., chief executive officer of Lehman Brothers told The New York Times.
But, analysts said they are worried Lehman Brothers, with exposure to the mortgage securities market, may be in a risky position itself.
"The government is taking all the downside and none of the upside," said CEO of First Principles Capital Douglas A. Dachille.
Investors expressed concern that the central bank can only take on so much risk and backing deals only buys time, delaying corrections that should naturally occur.
"The Fed can do no good at all if they effectively print money and give it to the banks and the banks dig a hole in the ground and put it in there," one hedge fund manager told the Times.
