JPMorgan shares jumped last Monday on news of the deal. Bear Stearns shares never traded as low as $2, as shareholders valued them more than twice as much. In the haste to complete the contract, a mistake included a sentence which required JPMorgan guarantee Bear's trades even if shareholders turned down the deal.
Now the Federal Reserve Bank, which helped pull the deal together, must approve modified terms, $10 a share. However, the Fed is obligated to protect taxpayers, subdue inflation, and not freely guarantee deals nor avert the "moral hazard" of bailing out Bear Stearns from taking overaggressive risks. Could the deal be unraveling?