5 Things You Need To Know And React Now Before Tomorrow!

1. JPMorgan to Buy Bear for $2 a Share

JPMorgan Says It Will Buy Ailing Bear Stearns for $2 a Share, or $236.2 Million

NEW YORK (AP) — JPMorgan Chase said Sunday it will acquire rival Bear Stearns for a bargain-basement $236.2 million — or $2 a share — a stunning collapse for one of the world’s largest and most storied investment banks.

The last-minute buyout was aimed at averting a Bear Stearns bankruptcy and a spreading crisis of confidence in the global financial system.The Federal Reserve and the U.S. government swiftly approved the all-stock deal, showing the urgency of completing the deal before world markets opened. Early indications, though, pointed to continued fear about the stability of the U.S. market, as the dollar hit fresh record lows against the euro, gold broke through $1,015 an ounce and Asian stocks sank.

“This is going to go down in very historic terms,” said Peter Dunay, chief investment strategist for New York-based Meridian Equity Partners. “This is about credit being overextended, and how bad it is for major financial institutions and for individuals. This is why we’re probably heading into a recession.”

2. Fed Takes New Steps to Ease Crisis

Fed Takes Steps to Ease Crisis, Cuts Lending Rate to Financial Institutions to 3.25 Percent

WASHINGTON (AP) — Federal Reserve Chairman Ben Bernanke said new steps announced by the central bank Sunday should help squeezed financial institutions get cash infusions– a fresh effort to provide relief to a spreading credit crisis that threatens to plunge the economy into recession.

The central bank approved a cut in its lending rate to financial institutions to 3.25 percent from 3.50 percent, effective immediately, and created another lending facility for big investment banks to secure short-term loans. “These steps will provide financial institutions with greater assurance of access to funds,” Bernanke told reporters in a brief conference call Sunday evening.

The new lending facility will be available to financial institutions on Monday.

It will be in place for at least six months and “may be extended as conditions warrant,” the Fed said. The interest rate will be 3.25 percent and a range of collateral — including investment-grade mortgage backed securities — will be accepted to back the loans.

3. Asian Stocks Fall Sharply on Bear Deal

Asian Stocks Fall Sharply After JPMorgan Announces It Will Buy Bear Stearns

SEOUL, South Korea (AP) — Asian stocks are falling sharply as uncertainty grew following an announcement that one of the world’s biggest investment banks was being bought for a fraction of its former value.In Tokyo, Japan’s benchmark Nikkei stock index is down more than 3 percent. In Seoul, the Korea Composite Stock Price Index fell more than 2.5 percent. Markets in Australia and New Zealand also fell.

The declines follow the announcement by JPMorgan & Co. that it was buying Bear Stearns Cos. for $2 a share.

The drops follow a 1.6 percent decline in U.S. stocks Friday after the announcement of a Federal Reserve plan to alleviate a liquidity crisis at Bear Stearns that touched off concerns about the severity of credit troubles in the world’s largest economy.

4. Market Likely Uneasy Over Bear Stearns

Wall Street Expected to Be Uneasy Over Bear Stearns Deal, Also Waiting for More Fed Moves

NEW YORK (AP) — Wall Street begins the new week trying to come to terms with just how bad the fallout from the credit crisis is — so bad that an investment bank worth $20 billion weeks ago has been bought for just $236 million.

The news late Sunday that JPMorgan Chase & Co. will buy Bear Stearns for a sum that’s considered paltry by Wall Street standards is likely to leave investors shaken. What might give stocks some support is the Federal Reserve’s latest steps to inject cash into the banking system — steps aimed at lifting the economy but also to restore some confidence to investors. But how much that will help stocks, and for how long, is a big question on the Street.

Wall Street faces a paradox as trading opens — the more investors find out about the problems caused by billions of dollars in failed mortgages and investments, the more unknowns seem to crop up. And the near-collapse of Bear Stearns after it invested heavily in risky mortgage-backed securities, while it ends uncertainty about one company, still raises concerns about how badly wounded other financial institutions might be.

5. Paulson: Govt Will Act to Aid Economy

Treasury Secretary Henry Paulson Says Bush Administration Will Act to Calm Chaotic Economy

WASHINGTON (AP) — The Bush administration will “do what its takes” to stabilize chaotic markets and minimize the economic damage, Treasury Secretary Henry Paulson said Sunday after a tumultuous week capped by the government rescue of a teetering investment bank.

All eyes now are on Wall Street as leading financial advisers prepared for a Monday meeting with President Bush and the Federal Reserve weighs another deep interest rate cut Tuesday to stem even more deterioration.Paulson, in a series of news show appearances, defended the Federal Reserve’s extraordinary step Friday to provide emergency financing to one of Wall Street’s most venerable firms, Bear Stearns Cos. The central bank’s intervention was “the right decision,” he said.

The treasury chief sidestepped questions about what would have happened if the Fed had not ridden to the rescue, whether other firms are on shaky ground and the possibility of additional bailouts similar to Bear Stearns’.

At the same time, however, Paulson sought to send a calming message that the administration is on top of the turbulent situation. “The government is prepared to do what it takes to maintain the stability of our financial system,” he said. “That’s our priority.”

http://biz.yahoo.com/ap/080316/paulson_credit_crisis.html

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