Reply #12: More, interesting:

[elleng]

'The rescue of Bear is not permanent — the loans are for only a month — and there is an expectation that authorities will seek to arrange for Bear to be acquired, perhaps at a low price, or that it will be broken up and sold to more than one buyer.

Such an outcome could avoid systemic risk while leaving Bear’s top executives without jobs and perhaps deflecting criticism that they had not had to face the results of their mistakes. Bear stock fell 47 percent on Friday; all of the decline came after the rescue was announced.'

Furthermore, 'Overnight, the Federal Reserve and JPMorgan Chase arranged to provide the cash Bear Stearns needed. Bear could not borrow directly from the Fed because it is not a commercial bank.

The Fed had seen such problems coming, and had announced plans this week to lend money to major dealers in Treasury securities — like Bear — by taking in as collateral mortgage securities that are now hard to sell.'

So we the people hold the 'bad' collateral.

http://www.nytimes.com/2008/03/15/business/15regulate.html