Fed’s $30bn Credit Line to help JP Morgan acquire Bear Stearns?
sa1518 asked:
Can someone please explain exactly what the fed is doing? Are they lending JPM money as a secured loan?
Can someone please explain exactly what the fed is doing? Are they lending JPM money as a secured loan?
If so - why would they do this for JP Morgan as opposed to another bank that may have been in stable enough position to acquire Bear. And why should they shield JP Morgan from the risk of the company if they are willing to buy it?
Thanks
secured loan
secured loan
The Fed is not actually lending it to them. They are taking on the liability of the bad debt that Bear has if needed. You have to understand that their liability maybe in the 10’s of billions of dollars. No one company can afford to take this on.
On the opposite end, no one can afford the chaos the sinking of a bank as large as Bear would cause.
secured loan
In order to further protect the already struggling U.S. economy, the Fed cannot let any institution that has the power to hurt the economy go down. Everyone can recall what happened with Chrysler.
The Fed will not let anyone that big go under. So, it will co-sign, or fund, or finance enough money to save the struggling company and therefore help the economy from further turmoil.
secured loan
The money to JPMorgan is secured with secured mortgage funds. Huge pipelines of mortgage loans worth billions of dollars are used to back the loan as security. The other two answers are also correct.. The Fed’s are doing this to help stabilize the economy and the mortgage industry..It is a bold and wise plan, and should be a solid step towards securing the funds to repay the loan. .
secured loan
Hi,
I used Credit Solution to settle my debt and improve my credit score.They managed to reduce my debt up to 58%.It’s legitimate and free consult.I came across this company on NBC News Special Edition.Check it out here: