The Fall of Bear Stearns

The Fall of Bear Stearns
J.P. Morgan Chase to buy the troubled investment bank with help of a 30 billion dollar loan from the Federal Reserve. Transcript of radio broadcast:
20 March 2008
This is the VOA Special English Economics Report.

This week, the crisis in credit markets claimed Bear Stearns. The eighty-five year old investment bank in New York agreed on Sunday to sell itself to J.P. Morgan Chase. The price: just two dollars a share, as part of a rescue plan organized by the government.

Bear stock had traded at seventy dollars last week, and one hundred seventy last year.

The fall of Bear Stearns developed quickly. Banks were no longer willing to lend money to the company. The problems largely involved short-term loans, called repo borrowings, that are secured by assets like securities.

The problem was that lenders no longer knew the value of the assets that secured Bear's debt. Bear Stearns invested heavily in securities based on risky home loans.

Unable to get new loans, the bank suffered a liquidity crisis. By last Thursday, investors started withdrawing their money. This put more pressure on the bank to sell assets that no one wanted to buy. The next day, Bear informed the Securities and Exchange Commission that it would fail if nothing was done.

Officials from the Treasury and the Federal Reserve wanted a deal to save Bear Stearns before markets opened this week in Asia. They worried that if Bear failed, it could lead to even more problems.

The central bank agreed to lend J.P. Morgan up to thirty billion dollars to finance the purchase of Bear's less-liquid assets. The loan will be secured with those assets, and the Fed will take responsibility for them.

To increase liquidity in the market, the Fed also agreed to lend money to securities dealers, including investment banks. The central bank has not done this since the Great Depression of the nineteen thirties.

Last week the Fed offered banks up to two hundred billion dollars in loans. And twice this week it cut its discount rate for direct loans to banks. The Fed also lowered the target rate for overnight loans between banks for the sixth time in six months. It cut the federal funds rate by seventy-five basis points, to two and a quarter percent.

Shareholders in Bear Stearns will vote on the takeover by J.P. Morgan. Some are expected to oppose the low-cost deal. Bear employees own about one-third of the stock in their company.

There was some good news this week for financial stocks. Three major investment banks reported earnings that were better than expected for the three months ending February twenty-ninth.

And that's the VOA Special English Economics Report, written by Mario Ritter. I'm Steve Ember.




----------------------------Google Translate

秋天，熊士坦
JP摩根大通银行收购陷入困境的投资银行的帮助下一个300亿美元的贷款，由美国联邦储备委员会。全文电台广播：
2008年3月20日
这是美国之音特别英语经济学报告。

本星期，危机在信贷市场上声称， Bear Stearns公司。该八十五年旧投资银行在纽约商定于周日推销自己，以JP摩根大通银行。价格：刚才两美元的份额，作为一项救援计划，由政府主办。

承担股票买卖七十美元，上周， 170去年。

秋天， Bear Stearns公司迅速发展。银行不再愿意借钱给该公司。问题主要涉及短期贷款中，所谓的回购协议借款，有担保的资产证券。

问题是，贷款人不再知道资产的价值，有担保承担的债务。 Bear Stearns公司投入巨资证券基于风险的住房贷款。

无法得到新的贷款，该银行遭受了流动性危机。上周四，投资者开始撤离他们的钱。这把更多的压力，对银行出售资产，没有人愿意买。次日，承担告知美国证券交易委员会表示，它将会失败，如果什么也没有做。

官员由财政部和联邦储备委员会要处理，以节省Bear Stearns公司才开放市场，在本星期在亚洲。他们担心，如果承受失败，它可能会导致更严重的问题。

中央银行同意借给JP摩根高达300.0亿美元，以资助购买承受的程度较低的流动资产。这笔贷款将有担保的这些资产，以及美联储将采取责任。

，以增加市场的流通性，美联储还同意借钱给证券商，其中包括投资银行。中央银行已没有做这样大萧条以来的19名三十岁。

上周美联储提供的银行高达2000.00亿美元的贷款。与本周曾两次调降贴现率为直接贷款给银行。美联储还降低了目标利率隔夜贷款银行之间为第六届时间在6个月内。调降联邦基金利率75个基点，以两和0.25 ％ 。

股东Bear Stearns公司将表决收购由摩根大通。有些人预计，反对低成本的交易。承担自己的雇员，大约三分之一的股票，在他们的公司。

有一些好消息，这个星期，为金融类股。三大投资银行公布的获利优于预期，为3个月，截至二第二十九。

这也是该美国之音特别英语经济学报告，写马里奥里特尔。我史蒂夫Ember公司