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Stearns Investors Bear A Grudge

Publication Date: 
March 19, 2008
Bob Moon

Professor Joseph A. Grundfest was a guest on NPR's Marketplace. He gives his opinion about the Bear Stearns bailout and how secure the investors are in this case:

Joseph Grundfest: The bond holders of Bear Stearns are going to be covered by JP Morgan in this transaction. If the transaction fails, you lose all the money that you have invested in the Bear Stearns bonds.


Grundfest: If one looks out over the horizon, you could imagine shareholders giving up litigation claims. You could imagine a wide variety of other forms of resolution that could rationally persuade JP Morgan to increase the amount that it pays. But as a practical matter, why would JP Morgan give up something for nothing?