Bear Sterns Gets Bailed Out by the Federal Reserve

Over the weekend, JPMorgan Chase, the Federal Government, and Bear Sterns all came to an agreement that JPMorgan would purchase Bear Sterns for a mere $270 million ($2 per share), with the Federal Reserve guaranteeing all of the obligations that JPMorgan will assume from Bear Sterns.

Well, I don't know how you feel about it, but I'm certainly not okay with the fact that the government is bailing out Bear Sterns.

Granted, I understand that Bear Sterns is the fifth largest investment bank in the nation, and they are a tremendous asset to our economy, but the bail out of that company is quite contradictory to what I have heard from this administration time and time again.

Correct me if I am wrong, but all I ever hear from the government is how imperative it is that we allow the economy to run its course (where have we heard that one before...?). The President, Greenspan, and to some extent present Fed Chief Ben Bernanke, have been preaching about how private enterprise will lead us out of the recession. That was supposed to be the message behind their stimulus plan and tax reimbursement checks they are sending out, in that the extra $600 is supposed to be used in buying American products and boosting private enterprises.

Yet, that is not the message they are sending out when they help Bear Sterns out of a jam.

In fact, they are sending out the exact opposite message. They are saying that given the extremities of the times and the "slowing economy" that the government will do whatever it can to save the economy from ruin, even if that means (heaven forbid) getting involved in doing something like backing a loan or purchase.

However, that message doesn't apply to the mom and pop stores that are being gutted, abandoned, bought out and eventually eliminated across this nation. No, if they get in trouble, they can't even get financing from their local Savings & Loan if their credit has been damaged by their lack of business. Yet now, a company like Bear Sterns, who invested in one of the biggest financial follies of the past quarter century, is getting a pick-me up.