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Fed acts Sunday to prevent global bank run Monday ( Bear Stearns Taken over,...rates cut )
MarketWatch ^ | 9:40 p.m. EDT March 16, 2008 | Rex Nutting, MarketWatch

Posted on 03/16/2008 6:52:34 PM PDT by Ernest_at_the_Beach

WASHINGTON (MarketWatch) -- Acting quickly to prevent a run on major global financial firms, the Federal Reserve cut its discount rate by a quarter percentage point to 3.25% and offered to lend money to a longer list of firms than ever before.

he extraordinary weekend moves came as J.P. Morgan Chase sealed a deal to buy Bear Stearns Cos. for just $2 a share backed by funds borrowed from the Fed. The Fed board gave its approval to that unique funding arrangement, which guarantees JP Morgan against losses from buying Bear. See full story.

The Fed board also approved the creation of a special lending facility through the New York Fed that would be available to members of its primary dealers list, which includes both commercial banks and investment banks. Investment banks, such as Bear Stearns, have not been allowed to borrow directly from the Fed.

JP Morgan has access to the discount window through its Chase Bank subsidiary, but Bear Stearns does not have direct access.

Events have unfolded at warp speed over the last week. On Tuesday, the Fed announced a new lending program for primary dealers in the bond markets, but that program won't go into effect for two more weeks. On Friday, the Fed allowed Bear Stearns to borrow money via JP Morgan in a desperate bid to save the firm, which has been pummeled by losses on exotic securities backed by subprime mortgages.

The Federal Open Market Committee meets on Tuesday. Analysts expect the FOMC to cut the target for the federal funds rate by as much as a full percentage point to 2%. Another cut in the discount rate is also likely.

(Excerpt) Read more at marketwatch.com ...


TOPICS: Business/Economy; Front Page News; News/Current Events
KEYWORDS: 1929; bernanke; con; discountrate; economy; endofthedollar; fed; manipulation; profit; soros; stpatricksmassacre; subprime
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To: irish guard
JPM Chase now makes good on those obligations

Maybe not. Part of the deal for the Bear Stearns credit line arranged on Friday was that JPM would not be liable if Bear defaulted. IOW, there's a really good chance that the Fed effectively bought a ton of questionable paper from Bear.
141 posted on 03/16/2008 9:04:03 PM PDT by javachip
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To: HeartlandOfAmerica

“THEY’RE panicked and I think that others are gonna see that as readily as I do and THEY’RE gonna panic as well. Watch the stampede.”

Bear Sterns lost 95% of its paper value over the weekend as folk b egan to realize mortage instriments could be worthless...

What would you do. I bought more gold yesterday and will max my ATM withdrawals of cash tomorrow befofe I hunker down and wait to see what happens. I figure more cash on hand will not hurt.


142 posted on 03/16/2008 9:06:46 PM PDT by Jim Verdolini
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To: Jim Verdolini
Yeah. Keep the gold... and some cash. Maximum flexibility.

Hope it's not as bad as I fear.

143 posted on 03/16/2008 9:11:49 PM PDT by HeartlandOfAmerica (Don't blame me - I voted for Fred and am STILL a FredHead!)
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To: hiredhand

Yep you have been dead on as to what and when thus far !

Lets hope it’s a non event at best...........waiting , listening and learning !


144 posted on 03/16/2008 9:13:30 PM PDT by Squantos (Be polite. Be professional. But, have a plan to kill everyone you meet.)
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To: Ernest_at_the_Beach

Asian markets are down tonight.


145 posted on 03/16/2008 9:17:14 PM PDT by GOPJ (Obama's Rev shows blacks too can be hateful small minded bigots. Toss white guilt-it's a new day.)
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To: Ernest_at_the_Beach

146 posted on 03/16/2008 9:19:39 PM PDT by hripka (There are a lot of smart people out there in FReeperLand)
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To: JSteff
それは中々いいご質問ですね。さァー良く分からないけど。。。
147 posted on 03/16/2008 9:27:05 PM PDT by AmericanInTokyo (The GOP serves a huge cr*p sandwich every 4 years to Conservatives, & sez "shut up!, no choice!")
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To: JSteff

The true answer is the URL link screwed up there.


148 posted on 03/16/2008 9:27:33 PM PDT by AmericanInTokyo (The GOP serves a huge cr*p sandwich every 4 years to Conservatives, & sez "shut up!, no choice!")
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To: Squantos

I would be HAPPY for tomorrow to be just another “bad Monday”, and not the catastrophe that it could be.


149 posted on 03/16/2008 9:31:50 PM PDT by hiredhand (Check my "about" page. I'm the Prophet of Doom!)
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To: Ernest_at_the_Beach; Travis McGee; M. Espinola; Calpernia; All
Hate to say 'I told you so. But I did. Repeatedly . . .

Blame Greenspan. Blame Bernanke. Don't blame Bush. It's not his fault. But he will get all the blame from the media. Stupid Dims will be yelling and pointing fingers all week.

Oh, well . . . Nothing to see here. Time to move on.

Or . . . Learn something useful . . . Or not. Whatever will be . . . will freaking be.

150 posted on 03/16/2008 9:32:10 PM PDT by ex-Texan (Matthew 7: 1 - 6)
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To: Ernest_at_the_Beach
Extraordinary.

We're in a full melt down...and it doesn't matter what the dow says tomorrow. IF the stockholders don't sell it's because there's no place left to put their money.

One toilette is as good as another.

151 posted on 03/16/2008 9:34:11 PM PDT by Mariner
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To: nicmarlo

I’m not sure that the Fed really helped matters today....


152 posted on 03/16/2008 9:36:35 PM PDT by Halgr (Once a Marine, always a Marine - Semper Fi)
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To: Travis McGee

AKA “There’s never just one cockroach.”


153 posted on 03/16/2008 10:04:05 PM PDT by Pelham (Press 1 for English)
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To: Mariner

I was wondering about the same thing. We’re not seeing anyone talking about a ‘selloff,’ just ‘bank runs’.


154 posted on 03/16/2008 10:09:48 PM PDT by lainie ("You had your time, you had the power, you've yet to have your finest hour" (Roger Taylor, 1984))
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To: TigerLikesRooster

Actually, it was the FDIC that called back over 25 retired FDIC employees who were the experts in failed banks during the S&L crisis.

They pulled these people out of retirement.


155 posted on 03/16/2008 10:21:27 PM PDT by NVDave
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To: NVDave; Ernest_at_the_Beach

12:50India Sensex drops 4% in early minutes (from MarketWatch.com)


156 posted on 03/16/2008 10:24:16 PM PDT by SierraWasp (Changing America to an Obamanation is good? I think NOT! A McCaination isn't a whole lot better!!!)
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To: Ernest_at_the_Beach

Only small-time criminals go to prison. The biggest thieves and con-men get bailed out by the government.

Moral: If you’re going to steal, steal big.


157 posted on 03/16/2008 10:27:30 PM PDT by B-Chan (Catholic. Monarchist. Texan. Any questions?)
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To: anymouse

Thanks for the little verse. I’m going to locate my apple stand well away from any tall buildings!


158 posted on 03/16/2008 10:32:05 PM PDT by NaughtiusMaximus (Refusing to calm down since the Waco massacre.)
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To: Ernest_at_the_Beach

maybe we’ll have a bank holiday. mmm, I love holidays....


159 posted on 03/16/2008 10:34:28 PM PDT by isom35
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To: NVDave; Ernest_at_the_Beach

1:17 India Sensex drops below 15,000, last down 4.9% at 14,992.84 (From MarketWatch.com)


160 posted on 03/16/2008 10:42:31 PM PDT by SierraWasp (Changing America to an Obamanation is good? I think NOT! A McCaination isn't a whole lot better!!!)
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