What ever happened to creative destruction? It really is socialism for the big boys but cutthroat capitalism for the little people in this country. In my opinion, Bear Stearns, more than any other firm on Wall Street should be allowed to fail. No handouts, or bailouts from the Fed. If this were 1998, well, we all know what happened when Bear declined to aid in the bailout package of LTCM. So, that’s one reason. But the other is this: the more the Feds prolong a real shakeout the worse it will be when it finally comes.
Wow, it really is socialism, of the worst sort. From Barry at TBP:
If you are wondering WTF a non-recourse, back-to-back financing is, pull up a chair:
JPM gets to go the the Discount Window and borrow all the greenbacks they want; Then they loan that to Bear. In the event that Bear defaults, the NY Fed cannot go back to recover from JPM — hence, non-recourse.
The Fed is pissing away our taxpayer money on a company that in so many ways deserves to fail.
Update: Via Mish:
* Why do you reward a company with a failed model and poor results?
* Why do you bail out an over leveraged enterprise that is technically insolvent?
It certainly isn’t because they are too big to fail.
Update 2: Someone on a listserve I am on just asked a very trenchant question: “I wonder if Bear Stearns Exec’s will give up their bonuses?” The cost of the bailout by the Fed should be forced disgorgement of their bonuses.