Dear New York Fed”¦

I’ve got some credit card debt that I’ve racked up over the last few months - nothing super-unmanageable, but I’d rather not have to pay it back.  Also, my home value has tanked, since I live in Orange County, CA.  I’m not planning on missing any mortgage payments, but I’d rather not pay it.  All told, we’re not anywhere near the $29 billion in debt you guaranteed to handle for JP Morgan now that they’ve taken over Bear Stearns; and since my name is P. Morgan I thought you’d be willing to throw me a little bone too.

If you could go ahead and get back to me pronto that would be great.  But, since I didn’t make millions over the last few years I’m imagining you’re probably not going to bail me out.  Talk about the beat going on…welcome to another age of the socialization of private losses.  Airlines, LTCM, Chrysler, and now Wall Street.

Thanks a BILLION!

From Market Watch on the Fed-backed Bear Stearns Bail Out:

 In the latest groundbreaking move from the central bank, the New York Federal Reserve Bank will manage and dispose of the high-risk securities that helped push Bear Stearns Cos. over the brink and into the arms of J.P. Morgan.  

J.P. Morgan will finance $1 billion on the debts. Financing on the other $29 billion will be extended by the Fed to J.P. Morgan at the discount rate, which is currently 2.5%.Repayment of the Fed’s loan should begin in two years, the Fed said.For many analysts, the fundamentals of the transaction remain unchanged: gains on Wall Street are privatized while losses are socialized.While J.P. Morgan’s agreement to cover the first $1 billion in losses is “a good first step … the question is whether J.P. Morgan is paying $10 a share for Bear Stearns or $10 per share in order to get the benefit of a $30 billion guarantee from the Fed,” asked Dean Baker, co-director of the Center for Economic Policy Research.

“In other words, would J.P. Morgan be willing to make the deal without the guarantee?” he asked. 

Consumer advocates will argue that the Bush administration cannot limit its assistance to just Bear Stearns.

“In keeping Bear Stearns solvent, the Federal Reserve acted to avert a domino effect it feared could spark a wider financial market meltdown. But if a firm that’s partially to blame for this crisis warrants help, then surely so do millions of ordinary families who are struggling to keep their homes,” said the Center for Responsible Lending, in a statement on its website. 

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