C M Y K Nxxx,2008-03-17,A,001,Bs-BK,E3

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VOL. CLVII . . No. 54,252 © 2008 The New York Times NEW YORK, MONDAY, MARCH 17, 2008 $1.25 IN SWEEPING MOVE, FED BACKS BUYOUT AND WALL ST. LOANS A STUNNING FALL 7% BEAR STEARNS SOLD 6 Discount rate JPMorgan Chase Pays 5 A Bank Rate Cut and Only $2 a Share for 4 Open-Ended Credit Troubled Firm Federal funds for Big Firms 3 target rate

2 By ANDREW ROSS SORKIN By EDMUND L. ANDREWS In a shocking deal reached on 1 WASHINGTON — Hoping to Sunday to save Bear Stearns, avoid a systemic meltdown in fi- JPMorgan Chase agreed to pay a nancial markets, the Federal Re- mere $2 a share to buy all of Bear JASONDJ FM serve on Sunday approved a $30 — less than one-tenth the firm’s ’07 ’08 billion credit line to engineer the market price on Friday. Source: Bloomberg takeover of Bear Stearns and an- As part of the watershed deal, nounced an open-ended lending JPMorgan and the Federal Re- THE NEW YORK TIMES program for the biggest invest- serve will guarantee the huge ment firms on Wall Street. trading obligations of the trou- The deal for Bear, done at the In a third move aimed at help- bled firm, which was driven to behest of the Fed and the Treas- ing banks and thrifts, the Fed the brink of bankruptcy by what ury Department, punctuates the also lowered the rate for borrow- amounted to a run on the bank. stunning downfall of one of Wall ing from its so-called discount Reflecting Bear’s dire straits, Street’s biggest and most storied window by a quarter of a percent- JPMorgan agreed to pay only firms. Bear had weathered the age point, to 3.25 percent. about $270 million in stock for the vagaries of the markets for 85 The moves amounted to a firm, which had run up big losses years, surviving the Depression sweeping and apparently unprec- on investments linked to mort- and a dozen recessions only to edented attempt by the Federal gages. meet its end in the rapidly un- Reserve to rescue the nation’s fi- JPMorgan is buying Bear, folding credit crisis now afflicting nancial markets from what offi- which has 14,000 employees, for a the American economy. cials feared could be a chain re- third the price at which the small- A throwback to a bygone era, action of defaults. er firm went public in 1985. Only a Bear Stearns still operated as a After a weekend of intense ne- year ago, Bear’s shares sold for cigar-chomping, suspender- gotiations, the Federal Reserve $170. The sale price includes Bear wearing culture where taking approved a $30 billion credit line Stearns’s soaring Madison Ave- risks was rewarded. It was a firm to help JPMorgan Chase acquire nue headquarters. Bear Stearns, one of the biggest BRIAN SOKOL FOR THE NEW YORK TIMES The agreement ended a day in that was never considered truly Dilip Ratha of the , standing at left, last month at a school in his hometown in . white-shoe, an outsider that de- firms on Wall Street, which had which bankers and policy makers been teetering near collapse be- were racing to complete the take- fied its mainstream rivals. When the Federal Reserve cause of its deepening losses in over agreement before financial the mortgage market. markets in Asia opened on Mon- helped plan a bailout in 1998 of In a highly unusual maneuver, day, fearing that the financial Long Term Capital Management, Fateful Choice on Iraq Army World Banker Fed officials said they would se- panic could spread if the 85-year- the hedge fund, Bear Stearns cure the loan by effectively tak- old investment bank failed to find proudly refused to join the effort. ing over the huge Bear Stearns Bypassed Washington Debate And His Cash a buyer. Until recent weeks, Alan “Ace” portfolio and exercising control As the trading day began in To- Greenberg, Bear Stearns’s chair- over all major decisions in order kyo, however, markets tumbled man for more than 20 years and a By MICHAEL R. GORDON to minimize the central bank’s Return Home more than 4 percent. In the Unit- championship bridge player, still BAGHDAD — When Presi- FIVE YEARS IN ed States, investors faced an- own risk. dent Bush convened a meeting Genesis of a Plan Continued on Page A16 other week of gut-wrenching vol- The Fed, working closely with of his National Security Coun- By JASON DePARLE atility in American markets. bank regulators and the Treasury cil on May 22, 2003, his special Despite the sale of Bear, in- Department, raced to complete envoy in Iraq made a state- Iraqi military to help secure SINDHEKELA, India — An vestors fear that others in the in- Are Other Firms at Risk? the deal Sunday night in order to ment that caught many of the and rebuild the country, and important man from the World dustry, like Lehman Brothers, al- prevent investors from panicking participants by surprise. In a had been approved at a White Bank recently arrived in this iso- Wall Street is worrying that the ready reeling from losses on on Monday about the ability of video presentation from Bagh- House meeting that Mr. Bush lated village, where monkeys troubles that brought down Bear mortgage-related investments, Bear Stearns to make good on dad, L. Paul Bremer III in- convened just 10 weeks earlier. prowl rutted roads, rain pours Stearns may spread to other could face further blows. firms. Business Day, Page C1. billions of dollars in trading com- formed the president and his The interviews show that through the school roof and the mitments. native son who achieved the aides that he was about to is- while Mr. Bush endorsed Mr. In a potentially even bigger most did so by going away. sue an order formally dissolv- Bremer’s plan in the May 22 move, the Federal Reserve also ing Iraq’s Army. meeting, the decision was Lessons about global poverty announced its biggest commit- The decree was issued the made without thorough con- were waiting, but so were his sis- ment yet to lend money to strug- next day. sultations within government, ters’ chapattis. Migrant and mi- gling investment banks. The cen- The broad out- and without the gration scholar, Dilip Ratha was lines of the decision counsel of the sec- home. Continued on Page A16 are now widely retary of state or No one has done more than Mr. known, defended the senior Ameri- Ratha to make migration and its by proponents as can commander in potential rewards a top-of-the- Dollar Extends Loss in Asia necessary to en- Iraq, said the com- agenda concern in the world’s de- sure that Saddam mander, Lt. Gen. velopment ministries. And no Japanese stocks fell more than Hussein’s influence David D. McKier- place has done more to shape his 4 percent on Monday as the dol- did not outlive his nan. The decree by views than this forgotten hamlet, lar extended losses against the ouster from power. Mr. Bremer, who is where he studied under the lone yen. Page A9. But with the fifth known as Jerry, streetlight and began a poor anniversary of the prompted bitter in- boy’s improbable journey to the start of the war ap- fighting within the front ranks of an elite field. proaching, some government and “When I think about the effects Now, Cringing participants have the military, with L. Paul Bremer III of migration, I think about Sind- provided in inter- recriminations con- hekela,” he said. In the Shadows views their first de- tinuing to this day. Working from his office in tailed, on-the-record accounts Colin L. Powell, the secre- Washington five years ago, Mr. of a decision that is widely tary of state and a former Ratha produced the first global Cast by Cranes seen as one of the most mo- chairman of the Joint Chiefs of tally of remittances, the money mentous and contentious of Staff, said he was never asked that migrants send home, and GURINDER OSAN/ the war, assailed by critics as for advice, and was in Paris stunned experts from himself on The Dalai Lama accused China of waging “cultural genocide.” By MANNY FERNANDEZ when the May 22 meeting was all but ensuring that American down with the discovery of their New York has always been a forces would face a growing held. size. Gathered from a trickle of Mr. Powell, who views the city of construction cranes: They insurgency led by embittered hard-earned cash, the sums now are the steel crutches of the sky- decree as a major blunder, lat- Sunnis who led much of the exceed $300 billion a year. line, forever pulling it upward. er asked Condoleezza Rice, Dalai Lama Condemns China army. In subsequent work, Mr. But when one of them collapsed who was serving as Mr. Bush’s The account that emerges Ratha, 45, has pushed to reduce on the East Side on Saturday — national security adviser, for from those interviews, and money-transfer fees and increase For Suppressing Uprising in Tibet killing at least four people, de- from access to previously un- an explanation. the productivity of the money molishing a building and damag- published documents, makes “I talked to Rice and said, that is sent. Allies say his work ing at least five others — the dis- clear that Mr. Bremer’s decree ‘Condi, what happened?’” he has prompted projects in govern- By SOMINI SENGUPTA aster exposed the often-uneasy reversed an earlier plan — one recalled. “And her reaction ments and beyond that could relationship cranes have had DHARAMSALA, India — The him not to capitulate to that de- that would have relied on the Continued on Page A8 benefit millions of people. Skep- with the New Yorkers who walk Continued on Page A9 Dalai Lama accused China on mand. below them. Sunday of waging “cultural geno- “Whether the Chinese govern- Officials said that about 250 cide” against his followers in Ti- ment admits it or not, a nation cranes were now in operation in INSIDE bet and called for an internation- with an ancient cultural heritage the five boroughs, a telling sign of al inquiry into the suppression of is actually facing serious dan- the city’s building boom. Con- protests there, his strongest de- gers,” the Dalai Lama told re- struction cranes are towering be- Tough State Budget Choices fense to date of Tibetan Bud- porters during an emotionally hemoths, signposts of the city’s dhists who have staged an upris- charged news conference here. prosperity that dominate the sky- The faltering economy is caus- ing against Chinese rule. “Whether intentionally or unin- line for months but often go un- ing budget shortfalls and forcing Speaking at the headquarters tentionally, some kind of cultural noticed. state officials to make difficult fi- of the Tibetan government in ex- genocide is taking place.” Yet on Sunday, those who lived, nancial decisions, with few pro- ile, the Dalai Lama endorsed the His comments reflected the in- worked or happened to be walk- grams being spared from spend- right of his people to press griev- flamed passions among Tibetans ing near the cranes looked up- ing cuts. PAGE A12 ances peacefully against the Chi- abroad, who view the revolts, the ward with anxiety, their nerves Enigma on the West Coast nese authorities, and said he largest since the late 1980s, as a rattled by Saturday’s collapse. would not ask Tibetans to surren- watershed moment. A gas station cashier who The Chinook salmon that swim der to Chinese military police by Some Tibetans hope to press works below a crane at West 24th upstream the Sacramento River midnight on Monday, as Beijing for outright independence from Street and 10th Avenue said he to spawn in the fall have van- has demanded. He said that he China. They argue that they have trusted God to protect him. A ished, threatening the regional had no moral authority to do so an unprecedented political op- neighbor who lives across the fishing industry. PAGE A10 and that Tibetans had beseeched portunity to push for change as street, Ana Gonçalves, puts her China prepares to be the host faith in the builders and hopes Getting Ready to Play On country for the Olympic Games they know what they are doing. The field for the N.C.A.A. NEWS SUMMARY A2 in August and faces intense scru- Victor Simpkins, another neigh- men’s tournament is set, with tiny of its human rights record. bor, has watched the crane for TECH. SGT. JEFFREY ALLEN/ AIR FORCE, VIA A.P. Arts ...... E1-8 weeks, but now he looks up at it Georgia among the teams to play Business Day ...... C1-8 The Dalai Lama, 72, who heads their way in. The bracket, and McCain on a Visit to Iraq Editorial, Op-Ed ...... A18-19 the Tibetan government in exile with a new suspicion. more. SPORTSMONDAY, PAGE D1 International ...... A3-9 and serves as the spiritual leader “If that thing would fall over, Senator John McCain, above at the Baghdad airport, visited Iraq as Metro ...... B1-6 of Tibetan Buddhism, does not my building would be toast,” said part of a Congressional delegation that met with officials there, a trip National ...... A10-16 Mr. Simpkins, 53, a designer and his campaign saw as politically beneficial, as well. PAGE A15 SportsMonday ...... D1-11 Continued on Page A6 filmmaker. Obituaries ...... B8 Weather ...... D12 On Sunday, city officials re- Court to Review Gun Law A Grueling Road Trip FOR HOME DELIVERY CALL 1-800-NYTIMES leased a detailed description of Classified Ads ...... C8 Auto Exchange .... D11 the collapse at 303 East 51st Senior White House officials The long race for the Demo- Commercial Real Estate Marketplace ...... C6 Street, saying that workers were are at odds as the Supreme Court cratic presidential nomination “jumping” the crane — intricate- prepares to review the District of has taken its toll on campaign Updated news: nytimes.com U(D54G1D)y+#!?!#!"!{ CHRIS GRAYTHEN/GETTY IMAGES Columbia’s gun law. PAGE A10 staffs and journalists. PAGE A14 Tomorrow in The Times: Page D12 Continued on Page B4