NEW YORK, March 14 (UPI) -- Bear Stearns could not meet obligations Friday until a dramatic move kept the Wall Street investment bank afloat.
J.P. Morgan Chase and Co. borrowed money from the New York Federal Reserve and lent it to Bear Stearns in an arrangement that analysts said will cost the bank its independence.
Changes in federal reserve auction rules, unavailable for another 27 days, would have enabled Bear Stearns to borrow the needed funds itself. The quick action Friday signaled to investors how dire the bank's situation was, The Wall Street Journal reported.
After the collapse of hedge fund Carlyle Capital this week, the Bear Stearns crisis sent shivers through the financial community.
"Amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated," Bear Stearns Chief Executive Officer Alan Schwartz said in a statement.
To save the bank, J.P. Morgan borrowed funds, due in 28 days, from the Fed's discount window, which it then lent to Bear Stearns.
J.P. Morgan said it is working with the bank "on securing permanent financing or other alternatives," a signal that the bank, established in 1923, is up for sale.
