The Senate Banking and Finance committees are probing the government-backed sale of Bear Stearns Cos. to JPMorgan Chase & Co., voicing concerns about the risk posed to taxpayers from federal involvement in the deal.Senate Banking Committee Chairman Christopher Dodd today asked Bear Stearns Chief Executive Officer Alan Schwartz, JPMorgan CEO Jamie Dimon, Federal Reserve Chairman Ben S. Bernanke, Treasury Secretary Henry Paulson and Securities and Exchange Commission Chairman Christopher Cox to testify at an April 3 hearing on the issue.
Separately, the Senate Finance Committee asked the company chief executives, Bernanke, New York Fed President Timothy Geithner and Paulson to provide details on how the buyout was negotiated.
“While it is imperative to maintain the orderly structure of our markets, the sale agreement between JPMorgan Chase and Bear Stearns raises serious public-policy questions regarding the role played by” the three agencies “as facilitators of this agreement,” Dodd, a Connecticut Democrat, said in a statement.
The committees’ inquiries may herald a broader congressional backlash against the agreement, which Senate Majority Leader Harry Reid of Nevada has described as a “bailout.”
The Fed, in an emergency action earlier this month, authorized a $29 billion loan against illiquid mortgage-and asset-backed securities from Bear Stearns to help the company avert bankruptcy. JPMorgan contributed $1 billion.
Editor:
There are a lot of whispers of insider trading, leaks and other nefarious stuff, around this deal.
The legislators in Washington might also want to ask about naked short positions and ‘who knew what”, and “when”.
All it would take is someone with a Blackberry to fire a fast note to short – before the news on the JP Morgan deal and millions can be made.
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