Vendot

http://www.businessweek.com/ap/finan.../D8VCRQI80.htm

http://money.cnn.com/2008/03/14/mark...ion=2008031410

Lucky its just a small bank.

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Vendot

Who is next? I hope you guys are pulling out of the markets here, cos things are gonna TANK!

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"In a Time of Universal Deceit, Telling the Truth is a Revolutionary Act." - George Orwell

teomaxxx

I have 500% profit on my BSC puts. I wouldnt smile if these crooks didnt fucked me in the past with their bullshit buyout rumours (china, buffet, someone unknow).
Two days ago was their CEO lying in CNBCS that they have no problem and they expect 1Q to be profitable
These financial CEOs are sometimes one of the most sleaziest bastards lying all the way down.

TheAgent

Bear Sterns is no way small but it would have been a great stock to short

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mikeyddddd

linkhotten

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Vendot

Nah its small......... im waiting for a big fish to get fried.

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"In a Time of Universal Deceit, Telling the Truth is a Revolutionary Act." - George Orwell

teomaxxx

its around half of GS or LEH
http://finance.yahoo.com/q/co?s=BSC

By the way, this is just tip of iceberg. More BK are on the way.

teomaxxx

this is just in the front of us:

"You take Enron/Worldcom, you take the internet bubble, you take LTCM, you take the junk bond crisis, you take the S&L crisis you take the housing crisis of 1990, roll them all into one, and that's what we're looking at." TJ Marta, RBC Capital, February 6, 2008

teomaxxx

great article about bailout.

http://www.nytimes.com/2008/03/16/bu...9&e i=5087%0A

Fair Game
Rescue Me: A Fed Bailout Crosses a Line
By GRETCHEN MORGENSON

WHAT are the consequences of a world in which regulators rescue even the financial institutions whose recklessness and greed helped create the titanic credit mess we are in? Will the consequences be an even weaker currency, rampant inflation, a continuation of the slow bleed that we have witnessed at banks and brokerage firms for the past year?

Or all of the above?

Stick around, because we?ll soon find out. And it?s not going to be pretty.

Agreeing to guarantee a 28-day credit line to Bear Stearns, by way of JPMorgan Chase, the Federal Reserve Bank of New York conceded last Friday that no sizable firm with a book of mortgage securities or loans out to mortgage issuers could be allowed to fail right now. It was the most explicit sign yet of the Fed?s ?Rescues ?R? Us? doctrine that already helped to force the marriage of Bank of America and Countrywide.

But why save Bear Stearns? The beneficiary of this bailout, remember, has often operated in the gray areas of Wall Street and with an aggressive, brass-knuckles approach. Until regulators came along in 1996, Bear Stearns was happy to provide its balance sheet and imprimatur to bucket-shop brokerages like Stratton Oakmont and A. R. Baron, clearing dubious stock trades.

And as one of the biggest players in the mortgage securities business on Wall Street, Bear provided munificent lines of credit to public-spirited subprime lenders like New Century (now bankrupt). It is also the owner of EMC Mortgage Servicing, one of the most aggressive subprime mortgage servicers out there.

Bear?s default rates on so-called Alt-A mortgages that it underwrote also indicates that its lending practices were especially lax during the real estate boom. As of February, according to Bloomberg data, 15 percent of these loans in its underwritten securities were delinquent by more than 60 days or in foreclosure. That compares with an industry average of 8.4 percent.

Let?s not forget that Bear Stearns lost billions for its clients last summer, when two hedge funds investing heavily in mortgage securities collapsed. And the firm tried to dump toxic mortgage securities it held in its own vaults onto the public last summer in an initial public offering of a financial company called Everquest Financial. Thankfully, that deal never got done.

Recall, too, that back in 1998, when the Long Term Capital Management hedge fund required a Fed-arranged bailout, Bear Stearns refused to join the rescue effort. Jimmy Cayne, then chief executive at the firm, told the Fed to take a hike.

And so, Bear Stearns, a firm that some say is this decade?s version of Drexel Burnham Lambert, the anything-goes, 1980s junk-bond shop dominated by Michael Milken, is rescued. Almost two decades ago, Drexel was left to die.

Bear Stearns and Drexel have a lot in common. And yet their differing outcomes offer proof that we are in a very different and scarier place than in the late 1980s.

?Why not set an example of Bear Stearns, the guys who have this record of dog-eat-dog, we?re brass knuckles, we?re tough?? asked William A. Fleckenstein, president of Fleckenstein Capital in Issaquah, Wash., and co-author with Fred Sheehan of ?Greenspan?s Bubbles: The Age of Ignorance at the Federal Reserve.? ?This is the perfect time to set an example, but they are not interested in setting an example. We are Bailout Nation.?

And so we are. After years of never allowing any of our financial institutions to fail, they have become so enormous that nobody will be allowed to sink beneath the waves. Otherwise, a tsunami would swamp the hedge funds, banks and other brokerage firms that remain afloat.

If Bear Stearns failed, for example, it would result in a wholesale dumping of mortgage securities and other assets onto a market that is frozen and where buyers are in hiding. This fire sale would force surviving institutions carrying the same types of securities on their books to mark down their positions, generating more margin calls and creating more failures.

As of last Nov. 30, Bear Stearns had on its books approximately $46 billion of mortgages, mortgage-backed and asset-backed securities. Jettisoning such a portfolio onto a mortgage market that is not operative would, it is plain to see, be a disaster.

But, who knows what those mortgages are really worth? According to Bear Stearns?s annual report, $29 billion of them were valued using computer models ?derived from? or ?supported by? some kind of observable market data. The value of the remaining $17 billion is an estimate based on ?internally developed models or methodologies utilizing significant inputs that are generally less readily observable.?

In other words, your guess is as good as mine.

To some degree, what happened at Bear, of course, was a classic run on the bank ? the kind immortalized in Frank Capra?s homage to financial responsibility, ?It?s a Wonderful Life.? As fears about Bear?s financial position heightened, its customers began demanding their cash and big hedge funds that were using the firm as an administrative back office or lender moved their accounts elsewhere.

In addition, institutions that had bought credit default swaps from Bear Stearns, insurance policies that protect against corporate bond defaults, were scrambling to undo those trades as the firm?s ability to pay the claims looked dicier.

?For the government to print money at the expense of taxpayers as opposed to requiring or going about a receivership and wind-down of any insolvent institutions should be troubling to taxpayers and regulators alike,? said Josh Rosner, an analyst at Graham Fisher & Company and an expert on mortgage securities. ?The Fed has now crossed the line in a very clear way on ?moral hazard,? because they have opened the door to the view that they are required to save almost any institution through non-recourse loans ? except the government doesn?t have the money and it destroys the U.S.?s reputation as the broadest, deepest, most transparent and properly regulated capital market in the world.?

And here is the unfortunate refrain. Investors, already mistrusting many corporate and government leaders, were once again assured that nothing was wrong ? right up until the very end. So is it any wonder investors react to every market rumor of an impending failure with the certainty that it?s true? In too many cases, the rumors turned out to be true, notwithstanding the attempts at reassurance by executives and policy makers.

Only last Monday, for example, Bear put out a press release saying, ?there is absolutely no truth to the rumors of liquidity problems that circulated today in the market.? The next day, Christopher Cox, the chairman of the Securities and Exchange Commission, said he was comfortable that the major Wall Street firms were resting on satisfactory ?capital cushions.?

Three days later, it was bailout time for Bear.

HERE is the bind the Fed is in: Like the boy who puts his finger in the dike to keep sea water from pouring in, the Fed finds that new leaks keep emerging.

Regulators must do whatever they can to keep the markets open and operating, and much of that relies upon the confidence of investors. But by offering to backstop firms like Bear, who were the very architects of their own ? and the market?s ? current problems, overseers like the Fed undermine a little bit more of that confidence.

Another worry? How many well-capitalized institutions remain at the ready to take over those firms that may encounter turbulence in the future? Banks just do not have the capital that is needed to rescue troubled firms.

PornGeneral

Can't wait for everyone to get their stimulus checks and spend it on porn... ;)

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teomaxxx

JPM 36.54, -1.57, -4.1%) has agreed to buy Bear Stearns [s:bsc] for $2 a share in a stock-swap deal, according to a report in the online edition of the Wall Street Journal citing people familiar with the matter

fuck, fuck, fuck. Why did I sold my puts? it would be something around 15X bagger tommorow.....

Vendot

Market reaction on friday was weird...... im hoping reality bites tommorrow.

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"In a Time of Universal Deceit, Telling the Truth is a Revolutionary Act." - George Orwell

cool1g

grrrr...i was thinking friday about buying some put....seems like anytime a company annouced trouble there still is time to profit from further drops. but $2 a share is nuts!

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DateDoc

It is not just a bail out any more. JP Morgan has acquired Bears Stearn and the Fed has approved it. Now just the stockholders need to approve the deal.

http://money.cnn.com/2008/03/16/news...ion=2008031619

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DateDoc

Oh, and they are buying it for $2/share.

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teomaxxx

http://www.reuters.com/article/busin...busine ssNews

"The Fed has hit a new low with this, they did nothing to protect consumers from predatory lending and now their response is to bail out one of the most notorious enablers of predatory lending with no benefit to struggling consumers," said Lee.