NEW YORK, May 29: Bear Stearns, the most high-profile victim of the US subprime property crisis, approved a deal on Thursday to sell itself to banking giant JPMorgan Chase, a spokeswoman for the Wall Street firm said.

Shareholders approved a deal that sells the 85-year-old investment giant for a bargain-basement price of one billion dollars, concluding a deal engineered in March by the Federal Reserve to avert a collapse that some feared could create a financial tsunami.

“The shareholders approved the buyout,” spokeswoman Elizabeth Ventura said after a brief meeting of shareholders in midtown Manhattan.

The initial deal for a stunningly low price of $2 a share or $236 million announced on March 16 provoked ire from Bear Stearns shareholders surprised at the sudden meltdown of the storied firm. The amount was raised March 24 to $10 per share or roughly $1 billion.

The deal included a guarantee of $29 billion by the US central bank against a pledge of soured mortgage securities that had been amassed by Bear Stearns.

Bear Stearns had claimed it faced the equivalent of a bank run as a global credit squeeze made it impossible to raise cash to meet its obligations. But the Fed feared a collapse could have triggered a domino effect that could have frozen the global financial system.

Fed chairman Ben Bernanke defended the move in the face of criticism by lawmakers, saying it was not a “bailout” but a means “to preserve the integrity” of the financial system.

In comments to Congress April 2, Bernanke said: “With financial conditions fragile, the sudden failure of Bear Stearns likely would have led to a chaotic unwinding of positions in those markets and could have severely shaken confidence.”

He added that a default by Bear Stearns “could have been severe and extremely difficult to contain.”Since the deal was announced in March, financial markets have shown improvement and some analysts say the deal marked a turning point in the financial crisis. The Fed meanwhile has opened up its credit to large brokerages like Bear Stearns that have been stuck with mortgage-backed investments that commercial banks and other lenders have been shunning as collateral.—AFP