http://www.portfolio.com/views/blogs...
One of the most basic accounting equations:
Assets = Shareholder's Equity + Liabilities
Level 3 Assets Share. Equity
| Bear Stearns | $20 billion | $13 billion |
JP Morgan has done some intensive number crunching and believes that the Level 3 assets of Bear Stearns is close to zero. If the assets on the balance are decreased by $20 billion dollars, then Shareholder's Equity is decreased by $20 billion to a very negative $7 billion.
If this was not true then why did Bear Stearns agreed to a very generous buyout of $2 per share?
Bear Sterns got caught with old rotten mortgages which they could not sell!
