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Why did the Fed decide to work with JP Morgan instead of Berkshire Hathaway to acquire Bear & Stearns?
3 Answers
- 1 decade agoFavorite Answer
1. Berkshire Hathaway's balance sheets and overall health is much stronger (probably one of the strongest) than any other company right now. They don't seem to need as much help.
2. JP Morgan is ranked as the nation's #3 bank. Along with the rest of the nation's biggest banks, they are not doing too well either, as their most current 4th quarter report shows a 34% drop in net income or net worth. There are more investors in these big banks. So the New York Federal Reserve probably sees these top banks as the foundation to the financial world, so they want to help them to prevent further crisis.
3. The Fed Reserve didn't give JPM free money, but rather lending them $30 billion in "asset bailout."
Source(s): Financial analyst & economic strategist.
