SECOND PRIMARY DEALER AT THE BRINK
Probably better to sell this one, than liquidate it (I especially like the foreign buyer scenario). Not sure if this is credit risk related, spread-risk related, or derivatives-related, but such as it is:
The Federal Reserve responded swiftly to pleas from Bear Stearns that its coffers had "significantly deteriorated" within a 24-hour period as rumors about the bank's situation fueled the Wall Street version of a run on the bank [this reporting is seriously wrong - Bear is technically and importantly a "brokerage", not a "bank"].
Central bankers tapped a rarely used Depression-era provision* to provide loans, and said they were ready to provide extra resources to combat an erosion of confidence in America's biggest financial institutions.-AP
Central bankers tapped a rarely used Depression-era provision* to provide loans, and said they were ready to provide extra resources to combat an erosion of confidence in America's biggest financial institutions.-AP
*you heard it here first (you didn't believe it, though, did you?).
It's hard to say, but with the addition of 'emergency actions', this whole thing, from a financial institution perspective alone, looks worse than the 1980s Latin American debt crisis (during that time, several financial institutions operated for a long time despite probably being technically insolvent).
Update: still not clear if Bear hit a liquidity crisis, exacerbated by rumors, or actually has become technically insolvent (as did Carlyle this week).
