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The Tip of the Iceberg: JP Morgan Chase and Bear Stearns (B1) Case Solution & Answer

Bear Stearns & Co burned through almost all of its $ 18 billion in cash reserves during the week of March 10, 2008, and an arrangement unprecedented liquidity support from the Federal Reserve Friday, March 13 was insufficient to reverse the decline of the situation bear. President of the Federal Reserve, Ben Bernanke, Benjamin, Treasury Secretary Henry Paulson and Fed Chairman New York, Timothy Geithner intends to limit the impact of problems influence the financial system as a whole . James “Jamie” Dimon, chairman and CEO of Morgan, was in frequent contact with these drivers on the weekend March 14-16 negotiation scenarios to rescue Bear, but that would require to seek bankruptcy protection when markets open Monday. Late Sunday afternoon, March 16, the Board of Directors of the bear accepted the offer from Morgan to buy Bear for $ 2 per share, an offer that would not have done it without significant government assistance. There was hope that the Bear rescue prevent the spread of major damage to the most important financial world that many politicians believe, can you follow the failure of a large investment bank. This case study examines an important event in the financial and economic crisis that began in the summer of 2007, and provides the context for understanding the scope of the crisis, as revealed during the summer and fall of 2008. It was written to answer two sets of questions. First, it provides an opportunity to understand the problems of corporate finance and liquidity and valuation of companies. Second, the case allows exploration of aspects of internal and external business management and the challenges of navigating through an overwhelming crisis facing competitive pressures concerned.
by
Clayton Rose,
Daniel B. Bergstresser,
David Lane
Source: Harvard Business School
4 pages.
Date Posted: January 22, 2009. Prod #: 309070-PDF-ENG
Tip of the Iceberg: JP Morgan Chase and Bear Stearns Solution (B1) Case

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