Regardless of any other details, on March 16 the Federal Reserve gave $28 billion dollars to JP Morgan so they would “buy” Bears Stearns.
As the chart below illustrates, a non-recourse loan of $29 billion (the extra $1 billion JPMorgan may have to repay) was given to JP Morgan. To add insult JP Morgan still retains the right to any profits from the Bears Stearns collateral.
Oh…and on the jump from $2 to $10 a share for this bail-out; it reminds me of the scene from “Blazing Saddles” when the sheriff takes himself hostage.
Bear must have said “Give me more money or the Bear gets it”