Alea and Yves Smith both remark on the latest Fed concession to ease the JP Morgan takeover of Bear. As well as being temporarily exempt from limits on credit extended to subsidiaries - which seems justifiable under the circumstances - JP Morgan will be able to ignore $220 billion in risk-weighted assets and $400 billion in assets used in the Tier 1 calculation.

The Board notes that (i) JPMC would be well capitalized (as defined in section 225.2 ofthe Board's Regulation yI2) upon consummation of the acquisition of Bear Stearns, even without the regulatory capital relief provided by the exemptions; and (ii) JPMC has committed to remain well capitalized (as defined in section 225.2 of the Regulation Y) during the term of the exemptions, even without the regulatory capital relief provided by the exemptions.

So the assistance isn't essential for the takeover to go ahead - it's just a sweetener. Smith raises another rather worrying possibility:

Or did JPM need regulatory relief irrespective of the Bear transaction, and the deal provided a much-needed fig leaf?

Either way, it's clear that JP Morgan got a very good deal out of this - and it's becoming clear just how desperate the Fed was to get Bear sorted out before it collapsed.