There are two ways to read last night's sale of Bear Stearns to JPMorganChase for $2 a share:
- There were no other bidders. Bear Stearns only other option was to file for bankruptcy this morning. And Bear Stearns's executive were convinced that that was not an option--that not playing along meant that everybody everywhere would look with glee on the filing of every criminal fraud charge against them anyone could think of.
- Even with the Federal Reserve offering a put on the worst $30 billion of Bear Stearns assets, there is so much garbage in the closet that $2 a share is a fair price.
The market this morning believes in (2). I tend to believe in (1)--especially as JPMorgan is said to have set aside up to $6 billion to deal with litigation when Bear Stearns's shareholders and others claim they got a raw deal...