FORCES ALREADY AT WORK TO SCUTTLE DEAL AND GET TAXPAYERS TO PAY
If the deal doesn't come undone by the powerful shareholders who had to face the music last night, then the deal is a good one.
Assuming that JPM got a steep haircut, then what the back-against-the-wall deal forced was what the industry couldn't (or wouldn't) do on its own, create a mop-up fund for many of the non-bank casino-like financial institutions (hedge funds) who have significant layers of toxic waste in the portfolio.
With a fluffy cushion from this forced sale, JP Chase may now have the flexibility to take these upcoming losers onto its balance sheet, if necessary. The Fed gets away with credibility.
That's all a public good, and the fact that the firm at the center of the mortgage pass-through mess, in many ways, helped to make it possible, is not only poetic justice, it's a match of risk-and-reward.
Monday, March 17, 2008
Bear Sale - Good All Around, If It Is Made To Stick
