Senate Finance Committee leaders have questioned the terms of the recent taxpayer-backed sale of Bear Stearns to JPMorgan Chase.
Committee Chairman Max Baucus, D-Mont., and ranking member Chuck Grassley, R-Iowa, wrote a letter to Bear Stearns CEO Alan D. Schwartz and JPMorgan Chase chairman and CEO James Dimon, as well as Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and Federal Reserve CEO Timothy Geithner, asking for the exact details of the sale agreement, how and by whom it was negotiated, and all the parties to the agreement.
"Americans are being asked to back a brand-new kind of transaction, to the tune of tens of billions of dollars," said Baucus. "With jurisdiction over federal debt, it's the Finance Committee's responsibility to pin down just how the government decided to front $30 billion in taxpayer dollars for the Bear Stearns deal, and to monitor the changing terms of the sale."
He and Grassley pointed out that their committee has a responsibility to taxpayers to review the details of the deal.
"Separate from the question of what was needed, or not, to avoid a market panic in the Bear Stearns case are the implications of the deal for the taxpayers," Grassley said. "Congress has a responsibility to look at whether the taxpayers will lose money here, what kind of precedent this sets for federal involvement when other firms over-extend themselves, how this will affect the marketplace in other direct and indirect ways, and whether top executives will come out better than the rank-and-file workers who weren't in the room negotiating the deal."
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