That used Bear Stearns tee-shirt that some guy in Ohio won four years ago and used to work out in sold on e-Bay for $151.76. Still up for grabs: a Bear Stearns cafeteria card, football, windbreaker and pen, plus Jimmy Cayne’s roach clip and favorite grav-bong.
Sold! Bear Stearns T-shirt gone for $151.76 [Reuters]
Archive for March 2008
When Bear Stearns looked like it would go for $2 a share, there was a lot of sympathy for investors who stood to lose tremendous amounts. Employees—who own about a third of Bear—faced not only losing their jobs but their savings as well. So when they gnashed their teeth and hollered that their firm was being stolen by a conspiracy led by the Fed and carried out by JP Morgan Chase, it was just plain polite not to point out that their firm was on the verge of bankruptcy, that its failures had arguably put the larger financial system at risk and that what little they were getting was the result of a government-led bailout.
But now that the price of the deal has risen to ten dollars and shares are trading even higher than that, the backlash has begun. Writing for Smart Money, James Stewart writes that the protests against the rescue of Bear Stearns from insiders are “galling.” What’s more, it shows the Wall Street is all too willing to seek a government safety net when it stumbles on its free-market high-wire act, he argues. The profits from risk are private, but the losses are all too public.
Having artfully solved a thorny problem a week ago, the government has now embraced a deal whose terms reek of the bailout it was at such pains to avoid. If the government is willing to bestow such a windfall on a James Cayne, where will it it stop? Why should other financial firms reduce risk and shore up their capital? What discipline will the market ever be able to impose? Future disasters will only be worse, which will dwarf the immediate cost of the current rescue.
Yves Smith at Naked Capitalism is even more blunt, and he criticizes the media for being too sympathetic to Bear’s employees and investors. “Bear was going to fail as of Monday,” he writes. “Bye bye equity and many if not most jobs. How hard is this to understand? I thought anyone who was remotely financially literate understood what bankruptcy means. The employees should be grateful to get anything. But no, the media slavishly accepts their sense of entitlement.”
No Tears for Mr. Cayne [Smart Money]
Bear: Did the Fed and Treasury Push Too Hard? [NakedCapitalism]
Merrill Lynch has big plans to layoff ten to fifteen percent of its investment banking staff over the next week or so, according to DealMaker. The cuts are said to affect employees low and high, and may be related to a big writedown MER’s got in the hopper. Any connection between the 300 pink slips and the pink tops stolen out of John Thain’s daughter’s dresser drawer over the weekend? You tell us.
Merrill Rumored to be Planning Layoffs, Facing Huge Writedown [HousingWire]
We Have Reason To Believe An Underground Railroad Is Being Built Between Bear Stearns and Think Equity
By Bess LevinIt might seem like we’re cynical, unfeeling assholes over here but I would just like to point out that we see the silver lining in every situation. For instance, tensions are running high at JPMorgan and Bear Stearns, and Jamie Dimon had to work on a holiday that he doesn’t actually celebrate, and thousands of people are going to be fired but there’s still money to be made.
Enter: the little pool we’ve had going on here since the whole BSC thing went down, regarding when the ‘r’ word would be dropped. I said before this week was up, Carney said May 16th. I won ten bucks today when “Huffington Post” blogger Jill Brooke wrote that Jamie Dimon “was able to financially rape Bear Stearns employees with a bargain basement bid sanctioned by the Treasury Department that wiped out years of deferred compensation.” The fact Carney’s annual take home is now in my pocket is pretty nice but it’s not the most exciting part. We didn’t even have money riding on this but were extremely pleased to see Brooke upping the ante and reporting that Dimon’s attempts to bar other banks from hiring away BSC employees who still have their jobs before the deal is completed is an act of “enslavement.” She seems to get a little confused, though, and later refers to the slaves as “refugees” but that’s a minor detail (which she should go back and edit). Anyway, take back the night rally tomorrow at 383 Madison. I’ve donated half of my winnings to paint and poster boards, the least you can do is come up with some good slogans.
Bear Stearns Employees Already Financially Raped, Now Possibly Enslaved [Huffington Post]
British Prime Minister Gordon Brown and President o’ France Nicolas Sarkozy want the banks to have a frank discussion about their favorite sexual positions. Kidding, of course, but only about the sex; they really do want to get a candid dialogue going in the next couple weeks regarding how many billions of dollars in bad debts the various financial institutions ‘round the world have hanging on their books. Citi should probably start. In related news, nude photos of Sarkozy’s wife are being auctioned at Christie’s April 10th.
Britain and France seek transparency by banks [IHT]
Carla Bruni-Sarkozy Nude Photo Auctioned by Christie’s April 10 [Bloomberg]
Those of you seeking solace in the news that Jamie Dimon had to forgo his alleged Easter Sunday ritual of egg-dying and chocolate noshing are SOL: though the JPMorgan CEO played a rather convincing martyr when he told a fellow diner at San Pietro that he would be “working” over the holiday, there were two Jews he wasn’t able to fool. Jesus and myself. Jamie Dimon is Greek Orthodox. So while it might’ve seemed like a huge sacrifice to the untrained eye that the new of king Wall Street had to miss the big day in order to renegotiate the Bear deal and oversee the carpets being ripped up from Jimmy Cayne’s office, it wasn’t, ‘cause his Easter’s not ‘til April 27th. If he happens to be in the office on that day, which he probably will be, since it’ll take months to write all those pink slips, then he’ll get our sympathy. But not ’til then.
Sightings [Page Six]
More than a month after the trouble started, much of the auction rate securities market remains frozen, leaving hundreds of millions of investor dollars locked-up in illiquid securities. No-one has come forward with a solution, and there is little hope that the market will unfreeze anytime soon. Brokers have offered to loan money to clients with frozen money but this has provoked outrage from customers who are being asked to pay a premium by the same brokerages that led them to invest in the frozen securities in the first place. And most brokerages are refusing to do what many customers demand: buy-out the customer positions.
Joe Mysak at Bloomberg reports that the problem stretches much deeper into the investor world than many suspected.
I’m still getting e-mail on this situation. Closed-end- fund, preferred-share holders, at least the ones I’ve heard from, are livid at the fund companies and feel betrayed by their brokers. I find it very odd that the fund companies and the brokerage houses feel that they can alienate this crowd.
Who buys auction-rate securities? It’s not just “the rich.” I’ve heard from self-employed people who thought it was a good, temporary place for their life savings, at least until they decided what else to invest in. I’ve heard from people who sold businesses and put the money there, and from people who inherited some money and did the same.
The amount of money ranges from $50,000 to several million dollars. In each case, the investors say they were advised by their brokers that their money was in a cash equivalent. The investors rarely looked at prospectuses.
He also notes that if the market for these securities ever does come back, we can expect a lot more regulation.
Auction-Market Investors Look to Regulator for Hope [Bloomberg]
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