Joseph Lewis, one of Bear Stearns' largest shareholders, said that JP Morgan's offer was "derisory" or ridiculous. The currency-trading billionaire owns almost 10% of the brokerage firm, having built a stake since September when the shares were trading at more than $100.
As part of the deal, JP Morgan will guarantee all of Bear's open trades and all trades in the future until the deal closes 12 months from now. Bear shareholders may have been left with nothing if the firm wasn't acquired quickly and had to file for bankruptcy protection instead, experts said. If the firm had gone into bankruptcy the systematic risk for the economy would be huge.
U.S. stock markets soared this morning after Goldman Sachs and Lehman Brothers, the number one and number four brokerages in the country, beat earnings estimates before the markets opened. The news, coupled with a deep Fed rate cut this afternoon, has lifted the equity markets today.
This afternoon the Fed will announce their decision on interest rates. Fed Fund Futures are predicting a 100 basis point cut in the fed funds rate taking it to 2% and thus lowering the Prime Rate to 5%.
Brought to you, courtesy of The Mortgage Market Guide
