WOW!!! this recession is scaring me.
THIS HASNT HAPPENED SINCE THE GREAT DEPRESSION!!!!!!!!!!!!!
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The story of the day surrounded Bear Stearns (BSC: 30.00, -27.00, -47.36%), which announced minutes before the opening bell it received an emergency 28-day loan from the Federal Reserve Bank of New York through JPMorgan Chase (JPM: 36.54, -1.57, -4.11%) to restore market confidence -- a move that amounts to a last ditch effort to stave off financial disaster. The market initially jumped on the news until it became clear just how close Bear had come to running out of cash.
Bear chief executive Alan Schwartz told analysts in a call today that the company sought out this lending because over the past week its customers and counter parties pulled their money out of the firm at an accelerated pace, most notably yesterday. "Our liquidity position in the last 24 hours had significantly deteriorated," Schwartz said in a release. The situation is so dire for Bear Stearns that JPMorgan is in talks to acquire Bear's assets, such as its building or Prime Brokerage, CNBC reported. For traders who are already very worried about the credit markets, this is very troubling news. Also, S&P downgraded Bear's credit rating to "BBB" -- two steps above junk status.
Bear lost nearly half of its value in the first 30 minutes of trading this morning to plunge to an 8 1/2-year low -- its biggest one-day drop in history. Bear Stearns lost approximately $3.1 billion in market capitalization today alone. The stock, which was worth $145 just a year ago, closed at exactly $30.00. "In a perverse way, this pledge of liquidity is sending the stock sharply lower because it raises concerns about how bad the situation is. The more help that is offered, the deeper investor concern about the extent of the problems," said Frederic Ruffy, an independent options trader.
The last time a reserve bank was forced to take such an action was the Great Depression, when it gave 125 loans to institutions hurting from that drastic economic slowdown. "The Federal Reserve is monitoring market developments closely and will continue to provide liquidity as necessary to promote the orderly functioning of the financial system," the Fed said in a statement today. The Fed Reserve said its members unanimously endorsed the emergency action taken by the regional reserve bank.
http://www.foxbusiness.com/markets/article/big-bear-scare-swallows-wall-street-dow-loses-194-points_520371_2.html
Topic: WOW, Bear Stearns needs an emergency loan from the Fed or it will collapse!!! (Read 888 times)