JPMorgan Raises Bear Purchase Price

"It's a recognition that there is outrage," said David Hinkel, a senior consultant at Towers Perrin who focuses on mergers and acquisitions. But, he added, "I'm not sure upping the offer from $2 to $10 will make people happy who thought the value was $90. ... There's tremendous value and wealth being lost."

The revised deal is still the target of shareholder lawsuits.

Marian Rosner, a senior partner at Wolf Popper LLP, whose firm was one of many that filed class action lawsuits against Bear Stearns on behalf of employees, said "selling for $2 or $10 doesn't really make a difference."

The housing collapse and credit crunch spurred record-high home foreclosures and led financial companies to rack up multibillion losses in complex mortgage investments that turned sour. As credit problems spread, financial institutions became increasingly wary of lending. The situation has caused businesses and consumers to hunker down.

The new agreement also calls for the Federal Reserve which helped broker the emergency deal to save Bear Stearns from failure to provide a $30 billion term loan with portfolio assets put up as collateral. Those assets will be held by a newly created company managed by BlackRock Inc.

If any part of the portfolio defaults, JPMorgan will be on the hook to cover the first $1 billion in losses. As the assets are paid off, the Fed will receive principal plus any gains.

The Fed said the action is being taken with the support of the Treasury Department to "bolster market liquidity and promote orderly market functioning."

Bear shares had been much higher than its deal price last week in anticipation of a new buyout agreement. The stock surged on Monday, rising $7.23 to $13.24 after the new agreement was unveiled. JPMorgan shares also rose, adding $1.18, or 2.6 percent, to $47.15.

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AP Business Writer Madlen Read contributed to this report.