The Bear Stearns bailout: America’s Northern Rock
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Sometimes the Brits say it best. Here’s how BBC business editor Robert Peston is describing the joint rescue of Bear Stearns by J.P. Morgan and the New York Fed: ‘Since J.P. Morgan is saying there is no risk to its shareholders, this represents a central bank bailout of Bear Stearns.’
Well put.
‘This is America’s Northern Rock,’ Preston added, referring to the British bank bailed out by the Bank of England.
Other takes: The New York Times headlines its story, ‘JPMorgan and Fed Move to Bail Out Bear Stearns.’
The L.A. Times: ‘Bear Stearns Cos., one of Wall Street’s biggest investment banks, got an emergency loan from the Federal Reserve today to help it stay in business, a dramatic development that threatens to take the global credit crunch to a dangerous new level.’
In the sound-bite logic of American politics, the Bear Stearns rescue makes a massive housing bailout more likely. Today’s sound bite: ‘If the Fed can bail out wealthy investment bankers at Bear Stearns, the government can certainly offer aid to struggling homeowners.’ We are halfway down the slippery slope to a full-fledged government rescue for just about everybody with a grievance or a problem that involves a mortgage: banks, lenders, borrowers, the whole crowd.
Your thoughts? Comments? Send story tips to peter.viles@latimes.com
Hat tip: PS via e-mail.
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