The chairman of the Federal Reserve, Ben Bernanke, has declared that the allocation of $29billion from the federal budget in order to save Bear Stearns was an extraordinary measure. He sort of promised not to do that again and also explained how bad he felt at doing it, thus breaking the strict laws of laissez-faire capitalism.
According to Mr Bernanke, it was necessary because JP Morgan would never have bought the investment bank without the Fed's guarantee, given its seriously unsound financial status. If Bear Stearns had not been saved, its collapse would have impacted on the global economy because of the bank's worldwide trade links. He did not seem to realise that these arguments might as well apply to all firms hit by the future financial crises.
