Historic Night

Sunday night was a long,historic one.WSW heard of an emergency Federal Reserve action at about 7PM,and worked until 11:30 PM to ascertain the facts.The central bank had cut the discount rate-the rate at which the Fed loans to troubled banks-by .25% to 3.25%.It also opened the discount window to investment banks-an extraordinary move-and extended the loan period to 90 days.David Roche of Independent Strategy said the Fed was making policy on the hoof.It was a panic move,but it would probably work,Mr.Roche said as the Asian markets opened in crisis.The Federal Reserve was bracing the markets for the news that old line firm Bear Stearns(BSC)was near collapse and had been bought for 2.00 U.S. a share by JP Morgan Chase(JPM).Bear's partners had lost confidence in it and refused to loan it any more money,since Bear was deeply involved in the subprime mortgage debacle.The Fed agreed to back JP Morgan's bid with 30 billion dollars in securities guarantees.It could not let Bear,the fifth largest U.S. broker-dealer,fail,as that would devastate the already weak credit markets.