Sold!

The sale of Bear Stearns to JPMorgan Chase has closed. JPMorgan now has a larger footprint in investment banking, but it also bought the risk carried by Bear Stearns.

A victim of the subprime mortgage mess, Bear Stearns has been around for 85 years; JPMorgan had initially come in with a $2.00 a share bid, but eventually upped its offer to $10.00 a share, valuing the takeover at $2.2 Billion for the all-stock bid.

Federal regulators, including the Federal Reserve and the Treasury Department had encouraged the bid by JPMorgan to help protect other investment banks and help protect the economy and America’s financial system in general.

The writing was on the wall for a while, with Bear’s two hedge funds destroyed by mortgage-backed securities as well as billions of dollars in writedowns.

JPMorgan could prove that it has made a good move with the acquisition. The New York Fed will cover the majority of the assets if they go bad, with JPMorgan being on the hook only for the first $1 billion. If that happens, the New York Fed would cover the remaining $29 billion.

The acquisition could generate $1 billion in after-tax earnings for JPMorgan by next year, according to the CEO.