One year ago, Bear Stearns faced collapse when its short-term lenders stopped rolling over their loans to the investment bank. The federal government and the FED stepped in. They financed and brought about an acquisition by the JP Morgan Chase (JPM) bank. The reason for this was systemic risk. The FED feared that a Bear Stearns failure would cause the financial system to melt down when one party after another could not pay off on contracts. JPM assured others that Bear would honor its contracts. The chairman and chief executive officer of JPM said "Bear Stearns’ clients and counterparties should … Continue reading Failure Is Our Salvation