By far, our favorite part of yesterday's New York Times story on the battle of nitwits at Bear Stearns was the news that chairman Jimmy Cayne was recently required to pay a commission of $77,000 for selling his stake in the bank. The maximum fee charged to Bear Stearns employees is usually $2,500.

Who charged Cayne that fee? Alan "Ace" Greenberg, the fabled trader who ran Bear Stearns before Cayne took over. Greenberg told the Times that Cayne was ineligible for the $2,500 fee cap because, after being forced out of the chief executive's job in the wake of subprime losses, Cayne was no longer an employee.

"I don't understand why he comes in," Greenberg says. "He is not employed here anymore."

The bankers behind the deal for J.P. Morgan Chase to acquire Bear Stearns are quietly admitting that the deal was not reworked because lawyers mucked up the documentation, a claim that the New York Times prominently featured.

On March 24th, the second Monday following the initial announcement of the deal, a story in the New York Times reported that people involved with the takeover talks were claiming that the rushed preparation of the deal documentation had led JP Morgan to sign a guaranty agreement that went further than it ever intended. In the guaranty agreement signed in connection with the merger, J.P. Morgan agreed to "unconditionally" guarantee "the due and punctual payment" of all of Bear's "covered liabilities" for a period of time starting March 16, 2008, and seeming to last in perpetuity.

A little more than a week later, JP Morgan was floating the idea that the guaranty was never meant to last beyond the rejection of the deal by Bear Stearns shareholders. But this was nothing more than a cover-up meant to conceal the more frightening reality that Bear Stearns was once again teetering on the edge of bankruptcy, with brokerage clients fleeing for the exits, as DealBreaker’s analysis showed later that day.

The guarantee of Bear Stearns’ liabilities from JP Morgan Chase wasn’t working. Although the banking giant had put its “full faith and credit” behind Bear’s liabilities, some of Bear’s largest customers were refusing to do business with it. Counter-parties were fleeing, and Bear’s collateral was being refused up and down Wall Street. The guarantee, which was intended to keep Bear in business, had failed to provide customers with enough assurance to prevent a second round of the run-on-the-bank that nearly bankrupted Bear, people recently familiar with Bear’s operations are saying behind the scenes.

Bear Stearns' latest proxy statement, filed last week with the Securities and Exchange Commission, confirms our analysis. (Fortune magazine's Roddy Boyd has a good description of the dramatic renegotiations in the face of bankruptcy pressure here.) The proxy statement explains:

At the time of execution of the merger agreement, Bear Stearns and JPMorgan Chase hoped that execution of the merger agreement and the guaranty would stabilize Bear Stearns’ liquidity position by providing assurances to Bear Stearns’ customers, counterparties and lenders that JPMorgan Chase was standing behind Bear Stearns’ obligations. However, following the announcement of the transaction on March 16, 2008, Bear Stearns’ customers continued to withdraw funds, counterparties remained unwilling to make secured funding available to Bear Stearns on customary terms, and funding (other than from JPMorgan Chase and the New York Fed) was not available. JPMorgan Chase and Bear Stearns believed that the continued loss of customers and the continued unwillingness of counterparties to make secured funding available on customary terms was a result of, among other things, concerns that the merger would not be completed and the JPMorgan Chase guaranty would terminate, and perceived deficiencies and uncertainty on the part of Bear Stearns’ customers, counterparties and lenders regarding the scope and terms of the guaranty.

The proxy statement makes no mention of missteps in documentation. That contention has simply been dropped in favor of vaguer talk about negotiations to “clarify” the JP Morgan guarantee. It seems that the bankers who anonymously fed the “misstep” story to journalists weren’t willing to risk the legal consequences of repeating it to the SEC. This amounts to a tacit admission that the story was bunk from the get go.

We haven't heard the last of the Bear Stearns bailout-buyout plan orchestrated by the Federal Reserve and the Treasury Department. Now that the markets have started to recover from the initial shock over this unprecedented action, the political class is starting the raise the all important questions about who benefits from the deal and who pays. As is always the case when political institutions are involved, the two categories have only an incidental overlap. As time goes by, there will be more and more second thoughts.

Over at National Review, David Freddoso introduces us to a Republican Congressman who wonders what happened to his party's commitment to free markets. Are there no free-marketeers in financial foxholes? His summary of the way the Bear Stearns deal looks paints a very ugly picture.

In short, this is the mother of all government subsidies — a non-legislative appropriation that doubles the size of all this year’s congressional pork projects combined. Without so much as a vote of Congress, taxpayers are to buy securities of undetermined value for $29 billion — roughly Panama’s GDP, or the Federal Reserve Bank’s entire annual profit. They take this enormous risk so that JPM, a company worth $146 billion, has enough liquidity to make a major and profitable acquisition for next to nothing. JPM is more than happy to take on Bear’s book of client and counterparty accounts — these were probably never in danger of being lost, and it’s great business for JPM. The ones being rescued are Bear’s bond-holders. They keep their shirts. The stockholders at least keep their socks. The profits from the good times are retained, and the losses are socialized.

While we saw the usual sartorial pieces of cocktail dresses, hats and bow ties, it was this dapper little vest from the Bear Stearn’s spring ‘08 line that was the true hit. We suggest snatching up these puppies now, as the designer has taken a permanent retirement. Their worth will be sure to appreciate in value in fiscal years to come.

Spencer Morgan of the New York Observer infiltrated Connolly’s, the forty-seventh street Irish bar that plays home to Black 47 on Saturday nights and once hosted a lot of Bear Stearns regulars.

“On an average night there would be between 20 and 30 Bear guys,” said a 23-year-old Bear man we’ll call Tommy. He works on the investment banking side and has been a Connolly’s regular since he started at Bear a year ago. He said that on Friday, March 14, when it was pretty clear that the bank was heading south, and fast, more than 100 Bear employees, mostly men, gathered among the mahogany, rich leather and lighted green clover leaves of the bar.

“Bear! Bear! Bear!” they chanted as they downed their shots, recalled the young man. “Everyone was trying to keep hope alive.”

“They’re coming less, these last weeks,” said the compact bartender in an Irish brogue Monday night, when the Bear stock was being valued at between $4 and $10, depending on the appetite of JPMorgan. The figure was being displayed on several flat screens tuned in to CNBC’s Kudlow & Company. “I think a lot of them are nervous now. It’s a sad thing; a lot of them are older guys with retirement plans, and now this, you know?”

Bear Naked Gentlemen [Observer]

Jimmy Cayne is done with Bear. He filed his walking-papers with the Securities and Exchange Commission, the chairman and former chief executive of Bear revealed he had sold 5,612,922 shares at $10.84. Another 45,000 were sold by his wife. That position represents almost all of Cayne’s holdings in Bear, although he may still have options for more shares.

This should put an end to talk that a group of large shareholders might seek another buyer. Cayne was rumored to have talked with Joe Lewis, who owns over 9% of the company, about finding another bidder. But that was before JP Morgan Chase raised its price tag from $2 to $10 a share.

In another news, a reliable source tells us that Cayne was actually punched by another Bear executive in the company gym last week. We haven’t even tried to confirm that one.

Update: BSC sinking fast in after hours trading.

Cayne's SEC Filing [SEC.gov]

The Bear Stearns deal is getting messier. Wall Street rivals are poaching the best talent, forcing JP Morgan to promise lots of compensation money to keep them in place or face acquiring Bear with only the losers left. Unfortunately for the best laid plans of the Fed and JP Morgan, the uncertainty over the deal is leading many Bear employees to figure they'd be better off taking offers from competitors.

So now Bear is fighting back, asking a New York State court to issue restraining orders against departed brokers who Bear claims are soliciting the firm's clients to do move their business to the new company, Kate Kelly and Robin Sidel of the Wall Street Journal are reporting. These solicitation lawsuits are nothing new on Wall Street but they come at a very awkward time for Bear and JP Morgan. Morale is already low. The lawsuit puts a spotlight on the fact that many of the best employees and customers may have already left the firm, and doesn't exactly reassure worried employees that Bear is friendly toward its cubs.

One Bear recently departed Bear employee we spoke with this morning wondered how hard any former Bear employee would have to try to solicit clients away from the company.

"If you've read the papers, you know no-one wants to do business with Bear. They don't hate their own contacts, though. So if you hear your broker, or the desk you dealt with, has moved over to, say, Morgan Stanley, why wouldn't you move? Keep your business in a failing firm with people you don't know or join the pack and stick with who you know. Not a hard choice," he said.

Bear Seeks Restraints On Departed Brokers [Wall Street Journal]

Over 200 protesters from a housing advocacy group made it inside Bear Stearns corporate offices at 47th and Park Avenue. The protest was organized by the Neighborhood Assistance Corporation of America, which was founded by union activists. (They were the ones in the yellow shirts.) After being ejected from Bear’s lobby, they headed over to JP Morgan Chase. And, a few moments ago, they seem to have wandered off to do whatever it is demonstrators do after a demonstration. (We're guessing: wait in TKTKS line for Xanadu tickets.)

The protesters object to the Fed-led rescue of Bear Stearns by JPMorgan Chase and demand what they call “real solutions” to mortgage difficulties faced by homeowners. They advocate the implementation of a homeowners initiative which would stop all the interest rate increases, roll back the interest rate increases to the initial qualified rate, impose a moratorium on all foreclosures and require the mortgage servicers’ to pursue a loan restructure that reduces the interest rate and/or outstanding mortgage to a mortgage payment the homeowner can afford for the remaining term of the loan.

Update: Reuters now has a story on the protest up on its wires and CNBC has video of the protest.

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]

Did JP Morgan Chase inadvertently include an overbroad guaranty in its deal to acquire Bear Stearns? That's what unnamed sources were telling journalists over the weekend. The idea was that the rushed preparation of the documentation had led JP Morgan to sign a guaranty agreement that went further than it ever intended. And when the new documentation for the raised bid emerged, that story seemed to gain credibility because the new guaranty agreement was dramatically cut back.

But was it a misstep in the original documentation or is this story spin meant to provide cover for a rethinking of the guarantee? Yesterday we spent a good part of the day explaining that the available evidence indicated that the original, broader guarantee reflected the deal that was described on the conference call a week ago last Sunday. We were lonely voices on this point, as most of the financial media seemed to have contracted acute amnesia about that conference call. Fortunately, as the day passed, the media seem to have recovered.

In this morning's Wall Street Journal, Ashby Jones pretty much shoots down the "mistake" spin. After noting that some lawyers had "surmised" the broader guarantee was an "oversight" by JP Morgan and its lawyers at Wachtell Lipton, Jones says, "But other lawyers said the wording was in line with the intentions of at least one decision maker at the bank at the time the deal was struck, public comments suggest."

Steve Black, the co-head of J.P. Morgan's investment-banking division, appeared to address the issue in a March 16 conference call with analysts.

"The guarantee applies to all transactions on the books today and any transactions that are entered into while that guarantee is in place," he said. J.P. Morgan didn't respond to a request for comment.

The measure "seems rational," given the circumstances at the time, when J.P. Morgan was trying to signal to the market that it would stand by Bear's obligations, says Lawrence Cunningham, a law professor at George Washington University. "Bear was fighting for its life and a handful of forces were at play and it makes sense that J.P. Morgan would want to add credibility to the deal by giving a big guarantee." Observers add that J.P. Morgan might not have anticipated the shareholder resistance that surfaced to the original deal.

Over at the Conglomerate, law professor Gordon Smith agrees. He wonders how apoplectic JP Morgan head Jamie Dimon really was over the broad guarantee.

"I don't doubt that he presented the case in this way, but forgive me if this sounds like a bit of buyer's remorse," he writes. :In other words, Dimon's indignation at his lawyers looks like a pretext for another problem with the original deal, namely, that Morgan no longer wanted the deal to stay open for a whole year if Bear's shareholders rejected it."

Did Deal Overexpose J.P. Morgan? [Wall Street Journal]
The Morgan Guarantee [Conglomerate]

Earlier this afternoon Bear Stearns has posted to its Web site the amended merger and guaranty agreements in connection with the renegotiation of JP Morgan’s purchase. Some quick takes:

• As has been widely reported, the new price works out to around $10 per share. Speculators, bond-holders and dissident shareholders have been greatly rewarded for owning BSC. People who bought credit default insurance, and wanted to vote against the deal hoping Bear would default on its bonds, were smart if they bought BSC as a hedge.

• The Fed’s role in all this has changed. Now the Fed is taking control of $30 billion collateralized by illiquid assets from Bear in exchange for its $30 billion liquidity loan. The portfolio will be managed by Blackrock, so now Merrill Lynch (which owns about half of Blackrock) is in on the deal. JP Morgan is on the hook for the first $1 billion in losses on the portfolio.

• Did the Fed fix the $2 bear price? The controversy continues. This morning Andrew Ross Sorkin said yes, while Steve Liesman said no. This morning Liesman backed off, saying his sources were giving him conflicting reports on the Fed’s role in the pricing.

• The higher price is already leading some to refer to this as a bailout. Henry Blodget reads the tea leaves and says even bigger bailouts are on the way.

• Prices for BSC blew right past that $10 price tag, and now the action is in $15 calls.

• The Deal Professor has a good summary of the changes in the agreements. Unfortunately, he’s still buying the line that the guarantee was inadvertently broad. “The amendment makes clear that JPMorgan didn’t get the guarantee they wanted on the first bite,” he writes. Don’t you believe it. The changes really suggest nothing more than that the guarantee wasn’t getting the job done and they didn’t see any need to keep it out there.

Despite reports to the contrary on CNBC and the New York Times, there is no precedent in Delaware law that allows a company to sell up to 40 percent of their shares without shareholder approval. Rather, there is a rule-of-thumb employed by lawyers advising clients incorporated in Delaware that tells them deals shouldn’t lock-up a sale of more than 40% of the shares if they don’t want to risk the wrath of the courts. But the rule is cobbled together from reading a variety of Delaware cases, and it has never been tested in the courts.

At issue, as Gordon Smith explains on The Conglomerate, is whether a deal will be seen as coercive or precluding minority shareholders from exercising their franchise. In one early case, the Delaware Supreme Court struck down a deal in which 65 percent of the shareholders agreed to vote for a transaction in advance of the shareholder vote. In a later case, a lock-up deal was upheld by the courts when it required the final approval by a majority of the outside shareholders to approve the deal. Lawyers put the two together and came up with the rough-and-ready rule of thumb that if you didn’t lock-up more than 40% of the shares before the shareholder vote, you’d probably be okay.

“The bottom line is that JP Morgan is trying to lock up the acquisition of Bear, but it can't be too aggressive without triggering the wrath of the Delaware courts,” Smith writes. “39.5% plus the shares of the Bear directors who ‘have indicated that they intend’ to vote for the revised deal should get them to about 45%, and that may be enough to bring the deal home.”

This has important implications for Bear shareholders and may explain why the deal has progressed the way it has. Bear’s board had promised to sell JP Morgan 20% of the company, even if Bear’s shareholders rejected the deal. The fact that they didn’t promise more may well indicate that they didn’t feel comfortable with going as high as the 40% rule would presumably allow.

With a much higher bid in their pocket, however, they now have a better story to sell to shareholders—we got $1 billion more by just promising another 20% of the company—and, if necessary, to the Delaware courts. The board no doubt hopes that these facts will make it look as if it was acting in the interests of shareholders throughout the negotiations.

39.5%? [The Conglomerate]

The guarantee of Bear Stearns’ liabilities from JP Morgan Chase wasn’t working. Although the banking giant had put its “full faith and credit” behind Bear’s liabilities, some of Bear’s largest customers were refusing to do business with it. Counter-parties were fleeing, and Bear’s collateral was being refused up and down Wall Street. The guarantee, which was intended to keep Bear in business, had failed to provide customers with enough assurance to prevent a second round of the run-on-the-bank that nearly bankrupted Bear, people recently familiar with Bear’s operations are saying behind the scenes. (Guess who those people are!)

Customers were concerned that working out the guarantee would take too long and involve too much uncertainty. People familiar with the operations of Bear say that many customers simply found it easier to take their business elsewhere. They feared that if Bear shareholders rejected the deal, JP Morgan’s guarantee would not get them a quick and “dollar-good” resolution to their trades.

Now JP Morgan is claiming—albeit off-the-record through prominent business reporters—that they were forced back to the negotiating table because of “mistakes” in the contract. The guarantee is alleged to have “inadvertently included” provisions that made it overbroad and survivable even after the rejection of the deal by Bear shareholders. But this is a cover-up, an attempt to take out a provision that at least some of the JP Morgan deal team fully understood. The reality seems to be that JP Morgan wants to rescind the guarantee because it could involve serious costs without achieving the customer-assurance benefits that provided its original rationale.

What’s worse, JP Morgan and Bear Stearns quickly realized that the survivability of the guarantee would allow dissident shareholders to seek other investors while Bear stayed in business under the cover of the guarantee. The provisions of the agreements between Bear and JP Morgan require Bear’s board to continue to cooperate with JP Morgan but do not bind outside shareholders. JP Morgan, which eagerly cooperated with the Fed to buy Bear, did not anticipate the danger posed by shareholders using the 12-month lock-up period to find alternative buyers. If there was a negotiating mistake, perhaps this oversight was it.

One reason many people are so ready to believe JP Morgan’s line that the guarantee agreement was accidentally overbroad is that they don’t understand why JP Morgan would ever intentionally agree to the broad version. Why would JP Morgan want it’s guarantee to survive even if Bear Stearns’ shareholders reject the takeover offer? This sets up a seemingly perverse situation where Bear’s shareholders could seek a higher bid while still forcing JPMorgan to honor its guarantee. Clearly JP Morgan couldn’t have wanted this, right?

If the survivability of the guarantee seems outlandish now, it didn’t seem so outlandish last week. At that time, Bear was facing a modern day version of a run on the bank, with customers and counterparties fleeing for every available exit. In order to slow the exodus, Bear’s counter-parties needed strong reassurance that their trades with Bear were good and that it was safe to continue to do business with Bear. A temporary guarantee contingent on Bear shareholders accepting $2 per share might not have been acceptable to counter-parties. It may not, that is, have kept Bear in business.

And, as most accounts of the high pressure dealings of that weekend make clear, keeping Bear in business was one of the primary motivations of announcing the deal before the markets opened up in Asia. In fact, one of the first comments made by JP Morgan investment banking co-head Bill Winters emphasized that this was the purpose of the guarantee.

“Bear Stearns is absolutely open for business,” he said. “That is the purpose of the guarantee that we’ve put in place that should give ever body in the market complete comfort that when dealing with Bear Stearns you are backed by the full faith and credit of JP Morgan. So Bear is open for business today with all the credit backing that we can provide and intends to remain completely in the market up to and through the day when we complete the acquisition and obviously then afterwards as a part of JP Morgan.”

Now JP Morgan is singing a different tune but claiming it’s been the same old song all along. But those of us who were at the ball on Sunday night know better.

The New York Times is suggesting that JP Morgan’s agreement to guarantee Bear Stearn’s liabilities is much broader than intended. According to Andrew Ross Sorkin’s story on the front page of this morning’s Times, JP Morgan executives were angered to discover that the guarantee would stay in place even if the Bear Stearns shareholder voted down the deal. This is being blamed on the lawyers—and on the rushed pace of putting together the deal so quickly. The Deal Professor at DealBook describes this as an “apparent oversight” this morning. (Here’s a link to the guaranty agreement, courtesy of the New York Times.)

As we pointed out this morning, we don’t think it was an oversight. On the conference call on the Sunday night the deal was announced there was a lot of discussion of the guarantee. Some of it was confusing, as much of what happens on public conference calls is often confusing. But it seems pretty clear that JP Morgan fully understood that it’s guarantee would cover Bear liabilities even if the deal was rejected.

After the jump, we present an excerpt from the transcript of the Sunday night conference call. In the excerpt, Steve Black, the co-head of JP Morgan’s investment banking division, is asked by an analyst about the guarantee. He clearly says that it will cover Bear liabilities already entered into and those entered into prior to closing or rejection, but not those entered into after the rejection.

Everyone's talking about Andrew Ross Sorkin's blockbuster piece in the New York Times which claims that JPMorgan is negotiating to raise its bid price for Bear Stearns in an effort to win over reluctant shareholders. A lot of people who bought shares above the supposedly locked-in sale price last week are smiling today.

One part of the story, however, doesn't make sense. JP Morgan is apparently now claiming, behind the scenes at least, that the original merger contract included several mistakes, including the clause that allows JP Morgan's guarantee of Bear's trading position to survive a vote against the deal by Bear Stearns shareholders. Jamie Dimon is reportedly "apoplectic" that this provision was "inadvertently" included in the deal.

This story can't be right. We were on that conference call on Sunday night, and this provision got a lot of attention on that call. The JP Morgan bankers were very clear that the guarantee would survive a negative vote by Bear Stearns shareholders. The guarantee would survive the life of the guaranteed transactions, JP Morgan's bankers said on the call.

There was a bit of confusion on the call about this provision, so that those on the call had to ask about it several times. But clearly everyone involved was focussed on it. So why are we suddenly being fed a different story through Andrew Ross Sorkin?

JPMorgan in Negotiations to Raise Bear Stearns Bid [New York Times]

We're a hardened lot here at DealBreaker. We laugh in the face of our failures. As regular readers know well, we try to provoke laughter at the failures of others. So it was surprising when we found ourselves getting a bit choked up this morning as we read the Metro section of the New York Times. Peter Applebome rides with the commuters from Chappaqua to discover fear and self-loathing aboard the 6:13.

The pilgrims from Chappaqua trudged in from the cold drizzle Wednesday morning and gathered in drowsy silence like crows on the covered overpass above the tracks until 6:11, when someone said, “It’s time to get our heads bashed in.” Thus inspired, they descended to the platform, piled onto the largely empty cars, and then, either asleep, reading a newspaper, or with heads bowed as if in prayer over BlackBerrys, journeyed in silence on the 32.4 miles to Grand Central.

There's no happy ending to the story, unless you count Applebome's buddhist-stoicism as a version of happiness. As they say on the internet, read the whole thing.

Bear’s News Is Bad News on the 6:13 [New York Times]

Bear Stearns mementoes fetch more than shares [Reuters]

Has the bailout of Bear Stearn’s creditors created a precedent that implies a government guarantee for sophisticated investors doing business with investment banks? That’s what Nicole Gelinas argues in the editorial pages of the Wall Street Journal today.

[C]ounterparties on Bear's derivatives and other creditors like Bear's short-term financiers… should have known that they were taking on credit risk. Well, creditors are creditors; in a bankruptcy, they line up. What the Fed has done instead for these sophisticated investors is to offer them a rough approximation of FDIC insurance, even though they are not depositors and knew going in to the deals they had no such insurance.

For all the vague talk of “moral hazard” it’s nice to see Gelinas nail down one of the precise mechanisms. The Federal Reserve, with the help of JP Morgan, are rewarding lenders who extended financing to Bear Stearns and counter-parties who entered into complex derivative trades with the company despite—or perhaps out of ignorance of—the company’s shaky financial position. When you reward behavior, you get more of it. When you guarantee risk-taking, you get more risk. If Gelinas is right, the Fed’s intervention in the collapse of Bear Stearns may end up creating more risk rather than less in the financial markets.

The Bear Precedent [Wall Street Journal]

Bear Stearns shares have climbed down a bit from their near eight dollar highs earlier this week. (It still takes our breath away to talk about Bear Stearns at $8 highs. We remember not that long ago debating whether Bear was a bargain at $100.) But speculation continues over whether Bear Stearns shareholders could somehow reject the takeover bid from JP Morgan Chase. As we said earlier this week, the extraordinary lock-up provisions make this scenario extremely unlikely.