J P Morgan offers $2/share for Bear Stearns

J P Morgan Chase & Co set a deal to buy Bear Stearns for a rock-bottom price of $2 per share (or approximately $240 million) while the US Federal Reserve expanded lending to securities firms for the first time since the Great Depression to prop up the financial system.

The Fed also made an emergency quarter-point cut in its discount rate to 3.25% and agreed to finance up to $30 billion of Bear's assets. US treasury secretary Henry Paulson pledged the government is prepared to do "what it takes" to maintain stability of the financial system.

The Fed is also expected to slash its key benchmark overnight interest rate by as much as 125 basis points. It has already cut the rate by a total of 225 basis points to 3% since mid-September -- putting downward pressure on the dollar.