Bear Stearns Sold To Rival Banking Giant JPMorgan
Bear Stearns Sold, Fed Cuts Rates, Asian Stocks Sharply Lower
Asian stocks opened sharply lower and the dollar fell Monday morning despite steps taken by the U.S. Central Bank to avert a credit crisis that threatens to plunge the U.S. economy into recession.
Late Sunday, the Federal Reserve cut its lending rate to banks, about the same time U.S. banking giant JPMorgan Chase agreed to buy cash-strapped rival Bear Stearns.
The bank sale valued Bear Stearns at about $250 million, far less than the $4 billion market value at the end of last week, in what amounts to a stunning collapse of one of the world's largest and most respected investment banks.
The U. S. Central Bank - the Federal Reserve - is expected to help fund some of the transaction.
The Bear Stearns deal occurred at about the same time the Fed announced it would cut its lending rate to financial institutions a quarter point to 3.25 percent.
The Fed also said it would create a new lending facility, to take effect Monday, that will allow big investment banks access to short-term loans.
Federal Reserve Chairman Ben Bernanke said the central bank's actions will assure financial institutions that they will have access to funds.
The Federal Reserves Open Market Committee meets this week and most analysts say it will cut interest rates further.