Close Window JPMorgan Closer on Deal for Bear Stearns Sunday, March 16, 2008 NEW YORK - Bear Stearns and JPMorgan Chase & Co. were close to an emergency buyout deal Sunday night aimed at averting further panic in the financial markets, media reports said.
The Wall Street Journal reported JPMorgan would buy Bear Stearns for a per share price that is likely to be "considerably less" than the $30 the stock closed at Friday.
The Journal and the Financial Times both reported the sides were in a rush to complete a deal before financial markets opened in Asia for Monday morning trading, amid fears that a crisis of confidence could roil the system further.
The government, led by the Treasury Department and the Federal Reserve, was reported to be closely monitoring the talks.
After days of denials that it had liquidity problems, Bear was forced into a JPMorgan-led, government-backed bailout on Friday. The arrangement, the first of its kind since the 1930s, resulted in Bear getting a 28-day loan from JPMorgan with the government's guarantee that JPMorgan would not suffer any losses on the deal.
Among the Wall Street investment banks, Bear Stearns was the most closely exposed to the mortgage crisis. The collapse of two of its hedge funds last summer was seen by many as one of the triggers of the current credit crisis.
"The Journal also reported that were a deal with JPMorgan to fall apart, Bear could conceivably file for bankruptcy late Sunday before Asian financial markets opened."
posted
The good old tax paying American is already got his wallet thrown into the ring weather he likes it or not.
He is going to make sure both of these bums don't get hurt.
I don't hear any right wing half wit calling this mess socialism.
Excuse me socialism is when a starving mother and children get some free milk and cheese and shelter for the night . What a bunch of commie they are.
Posts: 6008 | From: phoenix az | Registered: Mar 2005
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posted
The following is a timeline of recent events at the 84-year-old firm:
2007
_June 14: Bear reports a 10 percent decline in quarterly earnings as the mortgage market shows signs of cracking. Chief Financial Officer Sam Molinaro says, "We are impacted in a weaker mortgage market until that industry turns around."
_ June 18: Reports say Merrill Lynch seized collateral from a Bear Stearns hedge fund invested heavily in subprime loans — those made to people with poor credit.
_ June 22: Bear commits $3.2 billion in secured loans to bail out its High-Grade Structured Credit Fund, says company's troubles are "relatively contained."
_ July 17: Bear tells clients that the assets in one of the troubled funds are essentially worthless, while those in the other are worth 9 percent of their value at the end of April.
_ Aug 1: The two funds file for bankruptcy protection and the company freezes assets in a third fund.
_ Aug 5: Co-President and Co-Chief Operating Officer Warren Specter resigns. Alan Schwartz becomes sole president. CFO Molinaro takes over co-COO role.
_ Aug 6: Bear sends letters to clients reassuring them the company is financially sound.
"Rest assured, Bear Stearns has seen challenging markets before and has the experience and expertise to serve you and us well," the firm says.
_ Sept. 20: Bear reports 68 percent drop in quarterly income. The company's accounts slipped by $42 billion between the end of May and the end of August.
_ Nov. 14: CFO Molinaro says Bear will write down $1.62 billion and book a fourth-quarter loss.
_ Nov. 28: Bear lays off another 4 percent of its staff, two weeks after cutting 2 percent of its work force.
_ Dec. 20: Bear takes $1.9 billion write-down. CEO Cayne says he'll skip his 2007 bonus.
2008
_ Jan. 7: CEO Cayne retires under pressure. Schwartz takes over.
_ Mid-January: Financial stocks swoon as economists predict the U.S. economy will slip into recession. President Bush unveils a $150 billion stimulus plan.
_ Mid-February: Subprime woes spread to a broad range of assets, including certain kinds of municipal debt.
_ March 10: Market rumors say Bear may not have enough cash to do business.
"There is absolutely no truth to the rumors of liquidity problems that circulated today in the market," Bear says.
_ March 12: Schwartz goes on CNBC to reassure investors his company has enough liquidity and he is "comfortable" it turned a profit in the fiscal first quarter.
_ March 14: The federal government and JPMorgan Chase & Co. bail out Bear. The company says it sought the emergency funding after realizing it would not be able to keep up with a spike in demand from lenders.
Spector, 49, was responsible for fixed income and asset management at the securities firm, the second-largest underwriter of mortgage- backed securities. He was viewed by analysts as the top candidate to succeed 73-year-old Chief Executive Officer James E. Cayne. Spector was paid $36.9 million in 2006. he reportedly got no severance package...but? bloomberg reported he keeps stock and option awards worth about $23 million. they won't be worth as much now....
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
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quote:I don't hear any right wing half wit calling this mess socialism.
This is not socialism, but it is equally bad! What we have here is powerful bankers covering up for each other, as they always do. This is an absolute outrage because the free market is not being allowed to function. What should happen is that Bear Stearns should be allowed to fail and so should every other bank that made bad investments. However, that could be painful because banks don't have reserves to cover all the redemptions that would occur if their was widespread panic in the banking industry. So, the FED will do what it always does and guarantee that the big banks cover their bad business dealings.
The only way to fix this mess is to once again (for the 4th time in our history), get rid of the Federal Reserve (central bank).
Posts: 1577 | From: Ohio | Registered: Oct 2007
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-------------------- One is never completely useless. One can always serve as a bad example. Posts: 2430 | From: CA | Registered: Jun 2005
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quote:Originally posted by Relentless.: Won't ever happen without an extinction level event.
i hate to be a doom-n-gloomer but we may very well be seeing one unfold.
there is no quick fix for this one...
too many people have been borrowing too much money for too long.
starting with CapitAl Hill.
alot of these writedowns are not really from sub-prime losses. they are also from new accounting rules that require the bookkeepers to be more honest than they have been...
it wouldna been so bad if margin had been being used reasonably. it hasn't been...
Thornburg Mortgage (TMA) is defaulting on at least one of its reverse repurchase agreements as of this weekend and was downgraded, which will probably trigger a higher interest penalty on all of it's other ones too..
it bounced hard last week on the Fed bailout news, but it may be done after Fitch downgraded it today...
Merryl Lynch seems to me to be the one that will come out of all this with ALOT more gumballs in their gumball machine....
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
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posted
yeah $2 a share wow. I think Bear Sterns has been hiding this. It did not just come about on Thursday like they claim. Lots of people will lose lots of money. I mean $2 a share. WOW!!
Posts: 1458 | From: Ohio | Registered: Mar 2004
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posted
RUN FOR THE HILLS OUR DEBT HAS CAUGHT UP TO US!! PULL YOUR MONEY FROM THE BANKS! IS THIS THE END? Posts: 1458 | From: Ohio | Registered: Mar 2004
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posted
nope, not the end, just a huge $$$ market upheaval.
the US dollar i s going to hit new lows and we'll be able to sell US manufactured goods overseas at a profit again soon...
WASHINGTON (Reuters) - President George W. Bush on Thursday said he believes in a strong dollar and that the U.S. economy is fundamentally sound.
"We believe in a strong dollar policy and we believe, and I believe, that our economy has got the fundamentals in place for us to be, to grow and continue growing," Bush said at a White House news conference.
that's Bush-speak for we are going to choke the world markets with the US dollar and take it to the rock bottom because we can't afford to pay the interest on our Govt debt....
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
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posted
Dollar falls below 97 yen, first time since '95 March 17, 2008 - 12:16PM
The dollar fell below 97 yen for the first time in 12 years after the Federal Reserve cut its discount rate and financed a bailout of Bear Stearns by JPMorgan Chase.
The dollar also dropped to a record low against the euro and the Swiss franc after the Daily Telegraph said yesterday Goldman Sachs will reveal $US3 billion in writedowns when it releases quarterly earnings tomorrow.
Goldman Sachs Poised to Write Down $3 Billion, Telegraph Says
By Sarah Jones
March 16 (Bloomberg) -- Goldman Sachs Group Inc. will announce asset writedowns of about $3 billion this week, partly based on the declining value of its stake in Industrial & Commercial Bank of China Ltd., the Sunday Telegraph said, without citing anyone.
The investment bank may report a decline in first-quarter earnings of about 50 percent, the newspaper said.
Goldman will write down about $1.6 billion from its leveraged loans business and a further $1.1 billion from assets owned by the bank's private equity arm, the Sunday Telegraph said.
posted
The fed will probably do a emergency rate cut. Will it work again or will the markets get crushed?
Posts: 1458 | From: Ohio | Registered: Mar 2004
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posted
They cut the discuount rate to 3.25 today and futures are still getting smoked...Would love to be a fly on the wall during Tuesdays Fed meeting...
quote:Originally posted by osubucks30: The fed will probably do a emergency rate cut. Will it work again or will the markets get crushed?
it hasn't worked so far...
this Goldman PR is bugging the heck out of me.. why did they lose money in China?
BEIJING, Mar 14, 2008 (SinoCast via COMTEX) -- BACHF | news | PowerRating | PR Charts -- Chinese commercial lender Bank of China Ltd. (BOC, SHSE: 601988, and SEHK: 3988) plans to acquire part shares of Indonesia's sixth largest bank PT Bank International Indonesia Tbk. (BII) from Temasek Holdings Pte Ltd., an investment institution of the Singaporean government.
Several days ago, BOC's two peers, Industrial & Commercial Bank of China (ICBC, SHSE: 601398, and SEHK: 1398) and China Construction Bank (CCB, SHSE: 601939, and SEHK: 0939), both applied to the central bank of Indonesia for the participation in the acquisition.
posted
Dollar dropping still too. Everything on the buck is oversold but in just such a pattern that means we are about to see a breakdown continuation.
Posts: 2965 | Registered: Aug 2005
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MER, MS, LEH, GS etc. etc...Would not want to be long any of them...JMHO Now that I think about it I prolly would not wanna be long anything right now... Posts: 2383 | Registered: Apr 2006
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You have not heard? Oil is the safe investment. Stuff like this makes my brain hurt. LOL
Posts: 1458 | From: Ohio | Registered: Mar 2004
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quote:Originally posted by glassman: Investors expect the Fed to lower its benchmark rate by as much as a full percentage point, to 2 percent, when policy makers meet March 18.
quote:I don't know if I will want to watch the market tomorrow.
Not to worry, with the FED throwing around money like one of Eliot Spitzer's prostitutes, the market isn't going anywhere fast. So far, there has been no significant drop in the stock market and I don't see one in the near future. As long as the FED's printing press keeps working, they'll be fueling the fire and setting us up for a BIG FALL sometime in the future.
Posts: 1577 | From: Ohio | Registered: Oct 2007
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