JPMorgan-Bear deal close

JPMorgan nearing completion of deal to acquire foundering Wall Street brokerage Bear Stearns, Wall Street Journal reports.

JPMorgan Chase & Co. was reportedly close Sunday to acquiring troubled Wall Street firm Bear Stearns as fears deepened that Bear's demise could send shockwaves across the already shaky financial markets.

The Wall Street Journal cited unnamed sources who said the parties were trying to complete a tie-up before the financial markets open in Asia on Monday. The Journal also said that Bear Stearns executives are preparing for a possible bankruptcy filing - a move the firm might have to take if it doesn't consummate a deal.

Bear Stearns was on the brink of financial collapse Friday when JPMorgan and the Federal Reserve Bank of New York said they would provide the brokerage a short-term loan.

With the global credit crisis worsening, the Fed - along with officials from the Treasury Department and other government agencies - took the dramatic action to prevent the investment bank from going under and igniting widespread panic through the financial markets.

Treasury Secretary Henry Paulson said on Sunday that talks about how to rescue Bear had continued throughout the weekend. He defended the Fed's bailout on Friday as "the right decision" and said the Bush administration was ready to take other actions to bring stability to the financial markets.

The Journal report said the terms of the deal were still being negotiated, but that Bear Stearns could sell for about $2.2 billion, or slightly less than $20 a share. Bear Stearns shares closed at $30 on Friday, down 47%.

A deep, fast fall

The deal would mark an inglorious final chapter for 85-year-old Bear Stearns, a storied Wall Street firm whose unraveling has been fast and furious.

Rumors that Bear Stearns was on the verge of collapse started buzzing around Wall Street trading desks last Monday. Chief Executive Alan Schwartz - who took over as CEO in early January from longtime chief Jimmy Cayne - appeared on television on Wednesday afternoon to reassure the markets that the firm was stable.

But by Thursday night, Bear was in a severe crunch. Some firms that trade with it effectively stopped offering it credit because they feared that Bear was running short of short-term funding, or liquidity.

Shares of Bear Stearns opened last week at $69.75 and traded as high as $159 last year.