Fed Cuts Good for Banks but Not Seniors
Last week investors bore witness to JP Morgan Chase & Co.’s shocking and historic $2 a share fire-sale offer for Bear Stearns (the ante was raised to $10 a share Monday) and the government’s $30 billion bailout of the longstanding investment bank. The Federal Reserve (Fed) followed up with a three-quarter percentage point interest rate cut. That move bought the federal fund rate, the interest that banks charge each other, down to 2.5%, the lowest since 2004. Investors felt a bit of relief when the stock market rose. But with every breaking news bit, the market remains pendulous and investors remain wary.