DrederickTatum's Profile
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Entry: Wall Street Socialism: How JP Morgan Gained Control Of The Means Of Financial Production
posted by DrederickTatum
Apr 02, 2008 12:42PM
@Novice
Good point there...I bet the real costs of Fed "sitting on its hands" would be even greater than you suggest.
Entry: Wall Street Socialism: How JP Morgan Gained Control Of The Means Of Financial Production
posted by DrederickTatum
Apr 02, 2008 3:05PM
@1:56
Yes... Goldman would have been another player who could have come into bid for Bear Stearns. Its possile that the Feds wanted to avoid the appearance of a "sweetheart" deal from Paulson. Goldman does have its balance sheet in order (though, IMO, it still holds a shockingly high amount of Level 3 Assets).
I believe JPM was the logical partner though for two reasons:
1) JPM was most familiar with BSC. JPM had been clearing trades form BSC trades and had a somewhat working knowledge of BSC's internals (though limited, JPM had better information than the other players). Having the best available information is hugely important when you have only 48 hours to work a deal for the world's fifth largest investment bank.
2) JPM had more to gain from the deal than Goldman. In terms of prime brokerage (Bear's specialty) JPM has been somewhat lagging. The prime brokerage business is what JPM really wants. Its demand for Bear would have been greater than that from Goldman.
Entry: UBS Preserves Street Cred With Music Money
posted by DrederickTatum
Apr 03, 2008 3:33PM
UBS will never have the "Street Cred" of DB-Alex Brown.
Best dealbreaker post...ever:
http://dealbreaker.com/2007/11/deutsche_bank_alex_brown_is_th.php
Entry: Morning Docket: 04.14.08
posted by DrederickTatum
Apr 14, 2008 10:56AM
Alberto Gonzalez must not have his resume to Kirkland...
Entry: Loeb/Griffin Friends Again, Griffin/Dimon, Not So Much
posted by DrederickTatum
Apr 16, 2008 1:36PM
Whether you like him or not, you have to admire Ken Griffin.
He's the manager who most reminds me of Michael Corleone. I'd love to work for him... but I think I'd strangely fear him.
Entry: Should I Stay Or Should I Go? Law School Attrition
posted by DrederickTatum
May 14, 2008 2:33PM
Threadjack
Can anyone confirm this story over at dealbreaker?
http://dealbreaker.com/2008/05/people_moves_anyone_need_a_law.php
\Threadjack
Entry: A Fall Guy in the JPMorgan / Bear Stearns Deal?
posted by DrederickTatum
May 14, 2008 3:56PM
sounds a little sketchy...
CEO's and Investment bankers at one of the world's largest banks seem like pretty sophisticated contract parties. Its hard for me to blame the lawyers.
Maybe the in-house attorneys or Wachtell should have foreseen or predicted that the shareholder's might veto the deal.... or maybe not. Its hard to say what exactly happened here. Texaco v. Pennzoil, this is not.
With the economy teetering on the brink, the threat of bankruptcy, the Federal Reserve breathing down their necks, and untold billions in counterparty and mortgage liabilities on the line, I imagine the shareholders weren't the number one thing on everybody's mind. What a weird, once-in-a lifetime kind of deal though.
Man, I wish I was in on it
Entry: Musical Chairs: Paul Clement Resigning as Solicitor General
posted by DrederickTatum
May 14, 2008 4:02PM
My guess: Kirkland - Where else for a conservative?
Clement has been brilliant in oral argument before the Supremes.*
*admittedly, i'm a huge geek.
Entry: Summer Associate Lunch Suggestions: Chicago
posted by DrederickTatum
May 29, 2008 12:58PM
The second hardest task in the world: Getting a NY lawyer to move to transfer to Chicago.
The hardest task in the work: Getting the same lawyer to move back.
I'd go Malnati's, Perry's Deli, and Hot Dougs on the lower price scale.
In 100 dollar per person range I'd go with Gibson's, Rosebud, and Roy's
On the elite end, its Spiaggi, Nomi, and Arun's.
Entry: The Hell That Is Bar/Bri: Open Thread
posted by DrederickTatum
Jun 03, 2008 5:30PM
I'd say Spak and Conviser were the best
Entry: Lehman Denies Fed Window Borrowing
posted by DrederickTatum
Jun 03, 2008 6:07PM
@To The Hilt
Thats an astonishing chart...wow
Entry: Lehman Denies Fed Window Borrowing
posted by DrederickTatum
Jun 04, 2008 10:50AM
@8:47 - I haven't heard anything. So the following is purely hypothetical:
The Bear Stearns situation has created an interesting paradigm. Suppose an investment bank's clients begin to flee out of fear of the counter-party risk. When this happened to Bear Stearns, Schwartz/BSC imprudently rode the sinking ship all the way down to 2 dollars a share.
If, hypothetically, another bank starts to sense its clients are walking out the door en masse, then that bank would HAVE TO sell itself as soon as possible to maximize the shareholder value. Fear of counterparty risk and client flight destroyed BSC more than anything. Its infinitely more important to cut an immediate deal... waiting around for a better price can be lethal.
I haven't heard any rumors about Lehman - either about a sale or about clients running away. Frankly I don't think LEH is in near the trouble BSC was in... Among other reasons, LEH has infinitely better management than BSC had.
But it's not difficult to imagine a merger arising without much rumor or conjecture. Given what happened earlier this year, it might a struggling I-Bank's best move.
I'm rooting for LEH. I'm not sure how many more dying investment banks this economy can handle. Over the years, Lehman's been run fairly well compared to say, C or BSC. It would blow my mind if LEH went down.
Entry: Today In Lehman Brothers Rumors
posted by DrederickTatum
Jun 05, 2008 2:21PM
5.5 Billion? Really? Its difficult to say whether that's too much or not nearly enough.
If your inclined to believe Lehman's company line that "All is well," then 5.5 Billions seem like a ton given that Lehman's paltry write downs.
If your inclined to believe Einhorn (and increasingly I am), there's not way tell if 5.5 billion is even close to being enough.
Entry: Chief Judge Kozinski and the Ira Isaacs Trial: Lots of Links, Plus a Pair of Polls
posted by DrederickTatum
Jun 12, 2008 2:03PM
I know I shouldn't be shocked. I know tons and tons of people look at this stuff... Every time someone famous gets busted for something like this, I always tell myself I won't be shocked again:
But its impossible for me not to be surprised. A federal judge? Kozinski of all people?
The whole thing is weird.
Entry: Bear Stearns Indictments: Could Jimmy Cayne Be Next?
posted by DrederickTatum
Jun 20, 2008 12:15PM
Jimmy Cayne could become one of the DOMINANT bridge forces in the whole Federal Corrections system.
Entry: Goldman Downgrades Citi, Merrill, Mediocre Liberal Arts School
posted by DrederickTatum
Jun 26, 2008 2:40PM
For academics, there is only one truly elite school - It's main campus is situated South of 55th, North of 59th street, East of Cottage Grove, West of Kimbark on the South Side of Chicago.
Everyone else is just ripping it off.
Entry: Meet John McCain's Economic Brain: Phil Gramm
posted by DrederickTatum
Jun 30, 2008 1:56PM
Austan Goolsbee > Phil Gramm
Entry: Meet John McCain's Economic Brain: Phil Gramm
posted by DrederickTatum
Jun 30, 2008 4:12PM
@2:15 - Yes... the same Austan Goolsbee.
Entry: Anheuser-Busch Plans Rallying Cry of "For Bud and Country"
posted by DrederickTatum
Jun 30, 2008 6:48PM
Hmmm... I wonder if Missouri politicians are going to be crying "Anti-Trust!" when BUD has to slash all the same jobs InBev would have done if the merger went through.
Although, if BUD was capable of "trimming the fat" as well as InBev, wouldn't they have already done it? The stock price was practically the same as it was in 2001... Just call it what it is - Bad Management.
Three cheers for director entrenchment.
Entry: Wall Street Socialism: How JP Morgan Gained Control Of The Means Of Financial Production
posted by DrederickTatum
Apr 02, 2008 12:11PM
@AB
That is a fair point... The answer is that JP Morgan still paid the purchase price - Not the Fed.
Believe it or not, BSC had value in its book of business, real estate, etc. If a stable buyer came along, the buyer restore the market's confidence in the rapidly dying BSC. The mass exodus of Bear would slow or stop altogether if a more stable, reliable entity stepped in to buy it.
The problem is that the market was exceptionally limited. Basically the market was 1) huge investment banks relatively untarnished from the subprime fallout; and 2) an institution with some knowledge of Bear's holdings and historical business model.
That was basically only JPM. Since the market consisted of essentially only one buyer, BSC had to take any deal it could get... The two dollare deal was accepted. When shareholder revolt seemed possible, JPM raised the price to $10.00 to deflate any possibility that the deal could collapse.
I would argue that the free market still worked. The pool of potential buyers was so small, BSC had to take what it could get...