JP Morgan's Bear Buyout a Reward for Canny Risk Management

Hmm, this article makes a lot of sense.

You can't accuse the government of bailing out Bear Stearns in any
traditional sense here. This is much more nuanced and, in the end, interesting.
Can you accuse the government, by contrast, of picking sides? Of siding with a
stronger, more conservative player against a weak and reckless one? Certainly.
They are punishing Bear while trying to salvage a bit of it not to mention
stability in the financial markets. And they are rewarding a better player.
That's the interesting aspect to the non-bailout nature of the 2 bucks and what
renders recycled story lines worth even less than Bear Stearns itself.

JP Morgan got the bargain price because they were shrewd and avoided the risks that Bear was taking on. They managed their risks like a investment bank is supposed to do. So they came out of it without any CDO dirt on their books. Then the government tosses JPM a bone and the firm accepts the offer only if that toxic debt doesn't come onto JPMs balance sheet.

If it was JPM taking big risks for big yields like Bear did then someone else would be buying JPM out instead. I mean JPM paid $236.2 million for a company whose headquarters building itself is worth more then $1.2 billion. JPM has some real risk-adverse deal makers in house. I think JPM may turn out to be a pretty good long once this credit mess blows over.