U.S. banking giant JP Morgan Chase agreed Sunday night to buy rival Bear Stearns, and the U.S. Central Bank cut lending rates to banks - both actions aimed at averting a credit crisis that is threatening to plunge the U.S. economy into recession. Asian markets are sharply lower in early trading on the developments.
The deal made Sunday night values Bear Stearns at about $250 million, far less than the $4 billion market value at the end of this week and signalling a stunning collapse for one of the world's largest and most respected investment banks.
The U. S. Central Bank - the Federal Reserve - is expected to help fund some of the transaction.
The Bear Stearns deal occurred at about the same time Sunday evening that the Fed announced it would cut its lending rate to financial institutions a quarter point to 3.25 percent.
The Fed also said it would create a new lending facility, to take effect Monday, that will allow big investment banks access to short-term loans.
Federal Reserve Chairman Ben Bernanke said the central bank's actions will assure financial institutions that they will have access to funds.
Source:VOA
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