Regulation

Fed Releases Minutes from Bear Stearns Meetings

The notes from two key meetings that led to the Bear Stearns bailout are made public.
Marie LeoneJune 27, 2008

Curious about what went on at the Federal Reserve Board as it was orchestrating the bailout of Bear Stearns? Take a look at the minutes released on Friday that sum up two key meetings. In the documents, dated March 14 and March 16, the Fed board pledged to backstop the deal allowing JPMorgan Chase to acquire Bear Stearns to save it from complete collapse.

The Fed provided a $30 billion nonrecourse loan to support the deal, which was announced on Sunday, March 16. At the time, JPMorgan agreed to acquire Bear Stearns for the fire-sale price of $2 per share. Without the offer, it was clear that Bear Stearns, once the world’s fifth-largest investment bank, would not survive its liquidity crisis without intervention. Trouble had been brewing at the bank since two of its hedge funds collapsed last summer, leaving it exposed to the sinking mortgage market.

The buyout offer from JPMorgan Chase was eventually raised to $10 per share, or about $1 billion — a far cry from the $67 per share at which Bear Stearns was trading two weeks before the acquisition announcement.