Michael Perelman wrote: What Brad says makes sense and is consistent with the press reports. Roubini seems to have gone much further, suggesting that JPMorgan may have been weak because of holding too much of Bear Stearns' junk. I cannot imagine what he meant otherwise when he talked about JPMorgan's counterparty risk. What am I missing? ============================================= The Wall Street Journal ran three long articles by Kate Kelly in late May reporting on the behind-the-scenes maneuvering by JPM's Dimon, Bear's Schwartz, Treasury's Paulson, and the NY Fed's Geithner which led to the Fed providing JPM with the $29 billion to bailout Bear, accepting the latter's toxic securities as collateral. There was no suggestion that J.P. Morgan felt vulnerable. Certainly, it would have been affected if the run on Bear Stearns had precipitated a wider global run on other shaky institutions, but there wasn't any hint by quoted or anonymous sources that the deep-pocketed JPM felt it's immediate interests as a counterparty were at stake or than it was driven by anything other than the Fed-protected opportunity to acquire the company at a fire sale price. The series begins here:
http://online.wsj.com/article/SB121184521826521301.html?mod=Leader-US On a second read of the Roubini interview, I don't think it's all that clear that he believes the Fed intervened to save JP Morgan from taking a hit as a counterparty. He was in full flight on the Fed's general approach to the credit crisis, and the reference may have been to the Fed taking JPM off the hook for Bear's dodgy assets. But it's an intriguing question, which I hadn't seen it raised before in all the coverage of the bailout. Why not seek clarification from Roubini directly? _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
