Fed Clears Way for Bear Stearns Deal

The approval allows JP Morgan to acquire Bear Stearns Bank & Trust in Princeton, N.J., the Fed said.

In a controversial move, the Fed last month backed a $29 billion lifeline as part of JP Morgan's takeover of troubled Bear Stearns, the nation's fifth-largest investment house, which was on the brink of bankruptcy. The company had invested heavily in risky mortgage-backed securities that eventually soured with the collapse of the housing market.

JP Morgan is not required to obtain the Fed's prior approval to acquire Bear Stearns Cos., the Fed said in a brief statement.