Bove: Fed Rescue for Bear Stearns

"The Federal Reserve's actions today may have been strongly influenced by Bear Stearns' (BSC) problem."
-Dick Bove, Punk Ziegel & Co.

Go figure: Tuesday morning's announcement by the Fed seemed to be designed to help the brokers and their fixed-income hedge fund clients who were struggling -- so said Brad Hintz, Bernstein Research covering the Financials (we noted similar sentiment here).

He's not the only one. Influential Bank/Broker analyst Dick Bove of Punk Ziegel (quoted above) specifically mentioned Beat Stearns as the beneficiary of the Fed's largess.

According to Marketwatch: "Bear's stock dropped 11% on Monday on concern that its borrowing costs are rising. For a brokerage firm, which relies on steady access to financing, such disruptions can restrain its businesses and leave it at a disadvantage to financially stronger rivals."

Pretty wild stuff -- $200 Billion in Fed lending against junk paper, to bail out one mid-size investment bank.

And the market's reaction: Dow up 3.55% (417 points), Nasdaq +4% or more than 86 points, S&P500 up 3.7% or 47 points.

Ain't Socialism grand?

Source:
Fed action may have targeted Bear Stearns
Alistair Barr, MarketWatch
MarketWatch 3:57 p.m. EDT March 11, 2008
http://tinyurl.com/2m4nv5