By Martin Howell
NEW YORK (Reuters) - JPMorgan Chase & Co
The shock news, the biggest sign yet of how devastating the credit crisis is for Wall Street, slammed the U.S. dollar to a new record low against the euro and pummeled Asia stock markets early Monday.
"The fear is how many more skeletons in the closet are still there in the global credit markets?" said David Cohen, economist at Action Economics in Singapore. "This is another effort by the Fed to calm things down, but the cloud on the horizon is just how much more of these credit issues are still out there."
The move will be seen as an attempt to prevent other major investment banks and brokers from suffering the same fate as Bear, the fifth-largest U.S. investment bank, as the pressures on the U.S. financial system from the credit market turmoil reach unprecedented levels.
Bear's major shareholders, including British billionaire Joseph Lewis and Bear Stearns' Chairman Jimmy Cayne, will have their holdings virtually wiped out by the deal, which will see JPMorgan pay only about $2 a share for Bear in JPMorgan stock.
The $236 million value of the deal, which is based on share count at the time of its annual report in January, compares with estimates of more than $1 billion that have been placed on Bear's world headquarters building on Manhattan's Madison Avenue.
Before it faced speculation about liquidity problems, which were quickly followed by a run on the bank last week, Bear's stock had been trading at around $70, and its 52-week high last April was at more than $159, valuing the company at about $24 billion at that time.
The pressures on companies like Bear prompted U.S. Treasury Secretary Henry Paulson on Sunday to say the U.S. government is prepared to do "what it takes" to maintain the stability of the financial system.
(Reporting by Daniel Wilchins, Joseph A. Giannone and Megan Davies; Editing by Tim Dobbyn)