[ninonitti]

The risk involved is at least $30 billion on the asset side off that gigantic see-saw might be only worth $20 billion.

So do the math:$20 billion downside $30 billion Fed backstop guarantee = $10 billion uptick yesterday for JPM.

I believe with aggressive work they'll be able to do better with the chaff than Bear did so their gain might be even larger.

If not and it's larger than the $30 billion then the Bear will eat them in about a month. (Or Bailout Ben will show up with another bag of our money)

[Jimmy Valentine]

My guess is that JPM/Chase will come home a very big winner on this. After all, they bought a temporarily illiquid securities portfolio that is backed by performing loans (for the most part). I thinkthat over the next thre to five years they will have some big paydays.

Old J. Pierpont Morgan is smiling somewhere.

[Moonman62]

(Or Bailout Ben will show up with another bag of our money)

The Fed doesn't receive appropriations from Congress. It's the Fed itself that is on the hook.

[JasonC]

No, the relevant math is, $385 billion in liabilities with an uncertainty of zero, to be paid in full whatever happens, and $365 to $395 billion in assets, where in that range you are at the start unknown, and a future uncertainty of up to 5% per year.

The higher value the market is putting on the combined entity reflects not liquidation value of assets, but the going-concern value of Bear, which might be worth up to $40 billion for its earning power in good times, cut in half because any financial risk today can be taken on the cheap, and marginally reduced for the legal costs etc of the transaction.

In all of which the value of a building is a rounding error. Noise on the asset side of the balance sheet making that side bounce around $20 billion a year - recently pure down - dominates the whole picture.