Today, JPMorgan Chase & Co. (NYSE: JPM) – a leading global financial services firm with assets of $1.6 trillion and operations in more than 60 countries, announced that, in conjunction with the Federal Reserve Bank of New York, it has agreed to provide secured funding to Bear Stearns, as necessary, for an initial period of up to 28 days.
It isn’t at all clear yet how bad things are at the company or what specific event, beyond the market rumors, prompted the crisis.
Through its Discount Window, the Fed will provide non-recourse, back-to-back financing to JPMorgan Chase. Accordingly, JPMorgan Chase does not believe this transaction exposes its shareholders to any material risk.
From its part, the Federal Reserve said that it has voted to endorse an arrangement to bolster troubled Bear Stearns Cos. and stands ready to provide extra resources to combat a serious credit crisis.
Treasury Secretary Henry Paulson praised the Fed’s leadership and said that the country’s financial system would be able to weather the problems.
The bank didn’t say how much Bear Stearns was borrowing.
Currently Bear Stern’s stock (NYSE: BSC) is trading at $33.94 levels -$23.06 into the session.
