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WASHINGTON, DC-Despite concerns about so-called ‘moral hazard’ and the painful hit Bear Stearns’ investors and employees have taken with the bailout, it is widely agreed that the Federal Reserve Bank averted a worse capital markets catastrophe with its engineered buy-out of the firm by JPMorgan Chase & Co. But for how long is the question on many minds.

“The real question is who is next?” wonders Michael Greenberger of the University of Maryland School of Law. “If Bear Stearns can be discounted from $30 per share to $2 per share in 48 hours, it can happen to anyone” says the former director of the Division of Trading and Market at the Commodity Futures Trading Commission and a former member of the Steering Committee of the President’s Working Group on Financial Markets. Today he teaches a law course at the University of Maryland on mortgage related financial products.

There are real concerns that there are other investment banks with MBS heavy portfolios that are similarly situated, he tells GlobeSt.com, and could just as quickly find that the market has concluded that their own internal valuations of their stock and assets are grossly overpriced. It is legitimate to wonder how many times the Fed will be stepping in–or should step in, he says.

Federal Reserve Bank chairman Ben S. Bernanke’s push for a bailout didn’t do any favors to taxpayers, Greenberger notes, as it is essentially guaranteeing $30 million worth of Bear Stearns assets that are illiquid. These mortgage related instruments, he says, for which the Fed is taking over “are untradeable and virtually worthless. When Bear Stearns goes from $30 per share to $2 that is because of the poor valuation of these instruments. They cannot be used as collateral and only the Fed is willing to take them on.”

Marc Louargand, current president of the American Real Estate Society and chief investment strategist with Cornerstone Real Estate Advisors, agrees there are other “Bear Stearns out there. The issue has gone way beyond MBS and is now endemic throughout the entire credit system–anyone who has leverage on their balance sheet is at risk,” he says.

Louargand acknowledges critics complaints about the bailout as legitimate concerns–but says the Fed could not have permitted Bear Stearns to fail. “It is doing what it is supposed to do right now,” he says, “which is supply liquidity to the financial markets.”

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