Marvin, you might be correct. His statement could be ambiguous, but my impression was that his reference to counterparty risk seemed to mean something different from just protecting JPM from the risk that they were taking on. Doug's note lends further support to the interpretation of Brad and what you are writing.
On Sun, Aug 03, 2008 at 08:59:57AM -0400, Marvin Gandall wrote: > 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 -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu michaelperelman.wordpress.com _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
