This unbelievable quote brought to us by Reuters yesterday evening: [Thanks L!]
NEW YORK, March 16 (Reuters) – JPMorgan Chase said on Sunday that it found Bear Stearns Inc. a well run bank with good risk control.
A JPMorgan executive said on a conference call that 200 employees scrutinized Bear Stearn’s books over three days.
If this is what happens to the good banks, heaven help the bad ones.
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Well, put it in this context: what would anybody say about a company they just purchased?
JP has their own shareholders to appease, and something tells me they’ll be a little grumpy tomorrow.
I don’t believe 200 workers could get an accurate read on Bear’s books in 3 days. Like Carlyle, Bear has 30 to 1 leveraged CDO’s. That is down from the 40 some odd to 1 they had last year. No one knows how they will be performing in six months to a year but as home values continue to drop we can make a pretty good guess.
Igor says blame
alas, I think Ambrose has nailed it:
“Foreign investors veto Fed rescue”, Ambrose Evans-Pritchard, Telegraph, March 17, 2008.
Igor, “redalert” and over at MyT: “oh $%*@ — looks like I was right”
He was probably talking about the prospects for the preferred shareholders. Also, I see it was a collective assessment, groupthink is at epidemic levels, and everyone wants everyone else to play follow the leader to keep these runs to a minimum so the big guys can also cash out ahead of time.
I just bought a really awesome used car for ten cents on the dollar. It only needs an engine, transmission, belts, hoses, windows, steering wheel and seats. Oh, tires and brakes, too. And seat belts. And A/C. And a radio. Hold on…maybe this thing is really a piece of crap.
Anyone wanna buy an really good used car from me?
Keith-
You were obviously the victim of a predatory car salesman.
At $2/share, I think JPM/Chase got a good deal – heck, their building is worth more than the $230+ million they paid. They essentially got the business for free and the CDOs etc that Bear had are already so distressed that JPM/Chase will very shortly come out smelling like a rose.
Well Yoda is weighing in again on the mess. He gets that things won’t get better until excess housing inventory and prices stabilize. But in typical wonk fashion he blames the risk models for the problem. How about using good old “common sense” for a model Allen? Banks should not lend money to those that obviously can not pay it back!
http://www.ft.com/cms/s/0/edbdbcf6-f360-11dc-b6bc-0000779fd2ac.html?nclick_check=1
Bear Stearns bonuses to its top executives in 2006:
$305 million
http://news.efinancialcareers.co.uk/PAY_ITEM/newsItemId-5746
Selling price of Bear Stearns to JPMorgan in 2008 :
$236 million
http://biz.yahoo.com/rb/080317/bearstearns_lawsuits.html?.v=3
HMM! I wonder if something wrong with the system???
The system in its current state encourages top execs to do everything to get “fake” short-term gains…that earn them huge bonuses…Longterm consequences be damned!
But thank goodness that U.S. Chimperor Bush has reassured us today that the U.S. economy is still strong, or I might be worried!
Why, since the Chimperor has handled all those other things all so VERY well…like the WMD’s, the war in Iraq, the Katrina disaster, Gitmo, the U.S. dollar value, the subprime mortgage crisis, U.S. secret illegal surveillance of its own citizens etc, etc…
Of course when Bush comes out and says, “Calm down. Everything is fine”, you know he must be absolutely right!
“JPMorgan Chase said on Sunday that it found Bear Stearns Inc. a well run bank with good risk control”
This whole mess just keeps getting wierder. I wrote something up about Bear Stearns today http://activerain.com/blogsview/427502/Bear-Stearns-from-2. I think a sign of their problems is they were bought for 236 million and their building is worth 1.2 billion. So basically their entire business has a negative value.
This just says it all. What do you get when the foxes mind the henhouse?
Too Big to Bail
The Fed’s Wall Street Dilemma
http://counterpunch.com/martens03172008.html
MikeC, you and I may disagree about a lot of things, but you’re right about one thing – the system which allows, and even encourages, executives to bleed the companies they manage for hundreds of millions, while putting line workers out of jobs and paying stagnating wages in a hyper-inflating economy, is fundamentally broken. These guys need to be in jail.
Of course, that said, you don’t chop off your arm to cure bronchitis – Obama bin Farrakhan’s increased taxation plan will not improve the economic situation.
Mr Law-
Say what you will about taxes but remember the repub’s steal more from me and you through these financial bailouts, no bid war contracts, and deficit spending than Barack could ever possibly achieve. Besides wouldn’t you just love to see the rich pay their fair share, unless you watch FOX so much you really believe they deserve even more tax breaks.
brucewho-
Note: I am the administrator for this site. I am not Twist.
Although I usually stick to maintaining the site, I thought I would take the time to reply to your comment.
I do believe the rich deserve tax breaks. I also believe the poor and the middle-class do as well. The government simply spends too much, on too much stupid crap. Reduce spending, and you can reduce taxes. Wouldn’t you agree that _you_ can do a better job managing your money and your interests than the government?
As for trying to tax the rich more (so they carry their “fair share”) – there are serious implementation issues with doing this. “Rich people”, as well as businesses, have tremendous flexibility in how they earn, invest, spend, and keep their money. Poor people do not.
My company does well, and my customers are mostly overseas. We also have some engineers overseas. The shrinking dollar (which is, in effect, a tax on those with dollar assets) has been very damaging to the business, and means that my employees are getting a paycut every week.
If we move the business to Europe, the owners effectively get a raise every week instead. Instead of putting money into the US economy, we would hire European lawyers, keep money in European banks, use European accountants, and pay European taxes (for software licensing, it’s cheaper).
Quite frankly, the only things keeping the company here at this point are inertia and the Bush tax cuts.
What this means in practical terms is that _any_ attempt to raise my taxes, or that of my company will result in less money for the federal government, not more.
Oh Oh I must be in trouble now. I’ve riled up Administrator. As I appreciate your position I must beg to differ in some respect. There are many ways to TAX a nation and the FED folly currently underway in the name of business certainly takes the cake. At this point I have to question what may be left to tax other than a top tier. Should we have no Gov? What is a reasonable compensation for efforts in our interest? Are those efforts in reality self interest for alas we are only a nation of men. So who should determine a fair tax? Is there such a thing? If there is no such thing then perhaps fair business practices are a pipe dream as well. Good night and good luck.