Bear Stearns - dying a second death?

Bear Stearns deal with JP Morgan smells more and more like the bailout we knew it was.

Now it looks like the Fed might need a bigger bucket.

From CJR:

• JPMorgan Chase is discussing quintupling its $2 bid for Bear Stearns to help the deal go through
• the Federal Reserve [...] put the deal together by guaranteeing $30 billion in shaky debt
• JPMorgan is in talks with the Fed to assume at least the first $1 billion in losses on that $30 billion.

NTY has this as front page news, because JPMorgan goofed in their contract language:

One sentence was “inadvertently included,” according to a person briefed on the talks, which requires JPMorgan to guarantee Bear’s trades even if shareholders voted down the deal. That provision could allow Bear’s shareholders to seek a higher bid while still forcing JPMorgan to honor its guarantee, these people said. When the error was discovered, James Dimon, JPMorgan’s chief executive, who was described by one participant as “apoplectic,”

CJR adds:

Sorkin also reports that Dimon has said privately he would “send Bear back into bankruptcy” if shareholders don’t agree to the deal but advisers have told him to tone it down.

So, it's not a bailout - its the right thing to do. Except, it was so "right" - that neither the buyers nor the current owners are too happy about it.

The shareholders are trying to kill this deal and JPMorgan is ringing the Fed on the way out the back door.

This thing keeps spinning out of control and the Fed's band aid just might come off.

Keystone-freaking-cops.