US Fed clears JP Morgan's acquisition of Bear Stearns bank

02 April 2008

Mumbai: The Federal Reserve Board has granted formal approval to JP Morgan Chase's acquisition of a banking unit of Bear Stearns.

The acquisition of Princeton, New Jersey-based Bear Stearns Bank & Trust, leveraged by Fed funds, did not require Fed permission, the central bank said in a statement.

The formal permission was intended to soothe Wall Street tensions, it said.

"Based on all the facts and circumstances, the Board has determined that an emergency exists requiring expeditious action on the proposal," the Fed statement read.

Defending the central bank's decision to offer as much as $30 billion for the rescue action, Fed chief Ben Bernanke said the Federal Reserve saw no choice but to orchestrate a dramatic rescue of Bear Stearns after the investment bank warned of imminent bankruptcy. (See: US Fed bails out Bear Sterns through JPMorgan Chase)

Bernanke was expected to face tough questioning from some members at the congressional Joint Economic Committee who see no justification in Fed putting taxpayers' money at risk to rescue a Wall Street bank.