This article has 11 comments:

Register or Login to rate comments »
•  
  • mrtaxx
  • 47 Comments
  • My Website

  Mar 24 04:32 AM
  If Bear is worth $10 or maybe even $20 as your article suggests, why are they selling? Why the threat of bankruptcy? Why doesn't the government back Bear with the $30 billion and let Bear stay in businesss? It looks like something crooked is going on here and the government and Bear's upper management along with it's board of director's is involved in these crooked dealings. Suprise! Suprise! Throw out the board and the upper management, get new management and let the employees who have there financial future at stake and the shareholders live on.

  Reply | Link to Comment
•  
  • zanardm
  • 42 Comments

  Mar 24 04:41 AM
  Got the Bear Street blues. Was the precipitous decline in BSC an orderly market in such stock? Why the silence from the exchanges and SEC? Does this send the wrong message to the Street that there is always plenty of liquidity for a run on any brokerage stock? Dead cat bounce for BSC stock? Bidding up the stock would constitute an early no vote on the merger. Wake up employees and others; or is it still 'bear in the head lights'? Can Bear Street still make money on the long side?

  Reply | Link to Comment
•  
  • TM
  • 23 Comments
  • My Website

  Mar 24 05:28 AM
  I believe the Fed instructed JPM to offer no more than 2/share to show this was not a bailout of BSC shareholders, so it will be interesting to see how this will play out. I imagine the Fed will not be happy about this but at the same time, there will be a lot of unhappy people if they don't agree.. Looks like a moral hazard slippery slope mess!

  Reply | Link to Comment
•  
  • mrtaxx
  • 47 Comments
  • My Website

  Mar 24 05:39 AM
  I just posted a negative article, to this article, against the federal government and Bear Stearns upper management and Bears board of directors, (it was the first response to this article) and it was deleted from this site, so i'm sending a copy of my posting to this article, along with the article to the world wide news organizaions and the federal government agencies involved, etc. etc. My comment said something to the effect that since this article indicates Bear may be worth $10 or maybe even $20 a share according to this article, why the threat of bankruptcy? Why doesn't the federal government give the $30 billion backing to Bear and let Bear stay in business? Why doesn't the federal government and the board of directors of Bear back the employees (who have their future and life saving invested in Bear, and who pay their salaries) and the shareholders? Something is not right here and it appears that the federal government and Bear's upper management, along with Bear's board of directors are involved in these crooked dealings. Suprise! Suprise! Throw out Bear's upper management, get rid of the the JP morgan deal and let the employees (who have their life saving invested in Bear) and the shareholders live on.
  
  cc - washington post. NY times, whitehouse, seekingalpha.com, congress, senator's, house of repesentatives, etc.etc.

  Reply | Link to Comment
•  
  • SA Editor Eli Hoffmann
  • 157 Comments

  Mar 24 06:03 AM
  Not sure why you're not seeing your comment as the first comment to this post, mrtaxx. It's right there at the top of the comments.

  Reply | Link to Comment
•  
  • macroguy
  • 9 Comments

  Mar 24 08:23 AM
  If the gov't needs to back $30 billion of debt does mrtaxx think the shares have material value (other than hold-up value)? And if the shares are essentially worthless, does he dismiss the moral hazard?

  Reply | Link to Comment
•  
  • syndicat
  • 95 Comments

  Mar 24 09:15 AM
  There was no way this deal was going to happen at $2. The shareholders had the JPM/Fed backing and 12 months to wait for
  financial markets to improve. The sharehoders had the control and,
  with an offer of $2, little to risk.
  
  The final deal, if there is one, will take place in a range of $15 to $20.

  Reply | Link to Comment
•  
  • Anonymous 2
  • 25 Comments

  Mar 24 12:49 PM
  One group of shareholders who have not been recognized are the RETIRED employees - many of whom have been 2, 3 and 4 decades long loyal hard working employees - who have over their careers earned and credited with compensation which has been deferred as part of their hard earned retirement funds and income for a period of up to ten years. With only a few exceptions, most all of these retired employees are living on what was a result of many years of loyalty and hard work and they have no responsibility for any of the current problems. Most of these employees are the worker bees of the company and did not retire with big bonuses and 401k plans. When the chose to retire, they included the expected receipt of deferred compensation as an important component of their retirement income.
  In many - or most? - instances, a large portion of the deferred compensation is in the form of shares of Bear Stearns - and a relatively small portion from "cash". For a retired employee to not receive his EARNED compensation over a deferred period of time is a hardship which is not deserving of persons who have already EARNED the compensation and should be able to receive the full value (plus money market interest compounding from the date of retirement) of these funds during retirement.
  I hope others who are retired employees of Bear Stearns might add their comments.

  Reply | Link to Comment
•  
  • Kostya Tszyu's right hand
  • 23 Comments

  Mar 24 02:12 PM
  The FED should lower their assistance by the same amount JPM increases their offer.
  Smells like corporate welfare to me.

  Reply | Link to Comment
•  
  • drerle
  • 1 Comment

  Mar 24 11:48 PM
  The increased value of Bear is in part explained by the Fed buying control $30 billion of the company's most toxic paper. The Fed should reduce it's holdings enough to allow the market price of Bear to drop back down to $2. The is no way that taxpayers should fund this assumption of moral hazard.

  Reply | Link to Comment
•  
  • Balance Sheet Checker (BSC)
  • 22 Comments

  Mar 25 05:31 PM
  I posted this comment as a response to another article before the $10 offer:
  
  Bear Stearns is worth a whole lot more than its current price but an irrational run on the bank (as short-term panics tend to be) put it and the whole financial system at risk. The Fed's role is to promote stability in the financial system which meant it had to do something. And fast. Now put yourself in the Fed's shoes. It didn't want Bear Stearns to go under. Period. And in the panic of the moment there was no way anyone was going to step up and pay a full price for Bear. What do you do? You don't really want to give Bear away to JPMorgan, or anyone else for that matter because that would imply that the system is/was in fact unstable and just giving it away to someone would put it in a comprimised position (as evidenced by all the inquiries/lawsuits/etc... the deal now faces). Everything I have read about this deal seems like the Fed came up with the perfect solution - Have JPMorgan offer to buy/backstop Bear for an absurdly undervalued price with some help from the Fed ($30 billion support that was incredulously only offered to JPMorgan?!). The less people in on this fix of a deal the better. As we have seen this has provided the needed stability/confidence for Bear to contunue operations as normally as possible under the circumstances, which is job A-1 for the Fed. Also at the ridiculously low price it ensures the deal never actually goes through because shareholders would never vote for it. (Even a week later the volume of shares trading hands well above offer price shows that nobody actually thinks this deal will go through). Finally the deal was structured so that it doesn't make sense for anyone else to make a run at Bear AND the whole process is forced to drag on for at least a year through a re-votes mechanism, giving the markets plenty of time to calm down. I must say, the Fed came up with a brilliant solution to such a tricky situation! A company with over 80 consecutive years of profitability (how many firms can say that?) gets to stay in business rather than being forced to sell itself out in an irrational panic. Sharholders will keep voting down the absurdly low offer (which, if the rumors are true, the Fed forced to be low-balled for this very purpose) and no one will be foolish enough to give JPMorgan 20% of the firm by making a counter-bid within the next year. In time this crazy JPMorgan offer will expire and it will again be business as usual for Bear (and more reasonable valuations will return for its shares). The value of Bear coming out of this will depend on how much Bear employees let JPMorgan meddle/sabotage their company while JPMorgan waits for their rejected offers to expire. Bear may lose some of its value as fair-weather employees panic and jump ship before this sorts itself out, but long-term employees that keep the faith in the value of their firm, their shares, and the financial system should come through just fine in the end (or at least much better than they are now!) There is, of course, the option on Bear's building which it will presumably have to buy back from JPMorgan next year for $400 million-or-so, but such is the cost for surviving a panic (and JPMorgan's fee for it's troubles).
  
  The new $10 offer had to be made because the world saw through the $2 offer and presumed the deal may not go through. Thus the confidence the Fed hoped JPMorgan would provide was comprimised by doubts about the likelyhood of JPMorgan's success. The new offer is much more convincing, but with the pending legal challenges it will probably be voided, as the Fed wanted (as per above) and it will probably take longer to resolve (again, as wanted per above).

  Reply | Link to Comment