By Jerome Corsi
Wall Street opened Monday nearly 200 points down after a weekend in which Bear Stearns, the 85 year-old securities firm, and Carlyle Capital Corp., an investment fund run by one of the country's largest private equity firms, each went bankrupt..
Over the frantic weekend, the Fed took unprecedented steps to provide almost unlimited lending to prop up anticipated widespread losses in bank asset portfolios.
Yesterday, J.P. Morgan agreed to acquire Bear Stearns for $2 a share, a deal that values Bear Stearns at a mere $236 million, compared to a market capitalization of $3.54 billion only last Friday. By midafternoon trading, the Dow was in positive territory, bolstered in part by J.P. Morgan, the biggest gainer among the index's 30 component stocks.
Bear Stearns continues to face a crisis in an asset portfolio of mortgage-backed securities that was leveraged as high as 30-1 by borrowing, with the borrowed funds also invested in mortgage-backed securities.
Carlyle Capital Corp. has faced much the same problem as its highly leveraged portfolio of $21.7 billion in mortgage-backed securities also faces enormous losses.