though Uncle Sam isn't sending checks to Wall Street. Here's the math.
Say the Fed extends $500 billion of emergency loans to firms in need
of short-term money. They're paying around 2.5% interest to Uncle Ben
(or Uncle Sam, if you prefer). That rate is way below what they'd pay
to borrow in the open market, if they could borrow. The difference
the way up and that are now whining about losses. You gotta love it -
private profits, socialized losses.

Now to the infamous Bear Stearns deal. Bear shareholders are set to
switch and ought to be forced to pay for it - got out whole because
J.P. Morgan agreed to take over Bear's obligations.
today's markets -if they were, Morgan wouldn't need the Fed's dough.
The Fed - which is to say the taxpayers - is eating the difference
between $29 billion and what that stuff is worth. It wouldn't surprise
enablers of the mortgage mess and other financial excesses being able

The lesser evil
snip

On the Brink
http://money.cnn.com/2008/03/28/news/economy/disaster_sloan.fortune/index2.htm

How you'll pay

Still with me? Good. Now let me show you how we taxpayers are picking
up the tab for much of this rescue mission to the markets - even
though Uncle Sam isn't sending checks to Wall Street. Here's the math.
Say the Fed extends $500 billion of emergency loans to firms in need
of short-term money. They're paying around 2.5% interest to Uncle Ben
(or Uncle Sam, if you prefer). That rate is way below what they'd pay
to borrow in the open market, if they could borrow. The difference
between the open-market price and 2.5% is a gift from us, the
taxpayers.

I think that's better than letting the world financial system collapse
- but it's a serious subsidy to outfits that made a lot of money on
the way up and that are now whining about losses. You gotta love it -
private profits, socialized losses.

Now to the infamous Bear Stearns deal. Bear shareholders are set to
get $10 a share - about $1.2 billion - from J.P. Morgan Chase (JPM,
Fortune 500). That's $1.2 billion more than they were likely to
realize in a bankruptcy had the Fed and the Treasury dared let Bear go
broke. More important, Bear's creditors - who were asleep at the
switch and ought to be forced to pay for it - got out whole because
J.P. Morgan agreed to take over Bear's obligations.

The only reason Morgan did that is its deal with the Fed. The Fed is
fronting $29 billion to Bear, which in turn will offload $30 billion
of its financial toxic waste into a fund run on the Fed's behalf. J.P.
Morgan eats the first $1 billion of losses - a concession it made to
the Fed, which was embarrassed and enraged when Morgan raised the
price it was paying for Bear to $10 a share from the $2 originally
agreed to.

The securities that Bear is shedding aren't worth $29 billion in
today's markets -if they were, Morgan wouldn't need the Fed's dough.
The Fed - which is to say the taxpayers - is eating the difference
between $29 billion and what that stuff is worth. It wouldn't surprise
me to see the Fed end up with a $4 billion haircut - but we'll
probably never know. (Once you take that haircut into account, you see
why Bear shareholders should stop complaining about getting "only"
$10, and why Bear debtholders should erect a statue to Bernanke.)