...recent decision the Federal Reserve Bank to broker the deal between Bear Stearns and J.P. Morgan was done over one frantic March weekend, and many observers, including myself, reluctantly concluded that this deal made sense for two reasons. First, the failure of any great commercial bank could start cascade that might well bring down other banks that were counter-parties to Bear Stearns on a plethora of intricate short-term financial transactions. Second, ironically, the existing shareholders of Bear Stearns were left reeling because the original $2 per share price (even quadrupled) wiped out huge portions of their ample stakes in what had once been a financial juggernaut. The stabilization of financial markets may--the jury is still out-have been worth the $30 billion that the Fed has put on the line.

Democratic presidential nominees Hillary Clinton and Barack Obama have insisted that it is rank favoritism for the government to bail out the banks but do nothing to help the thousands of homeowners facing looming foreclosure. In their...

NOTE: All illustrations and photos have been removed from this article.



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