Citing liquidity concerns due to major writedowns on mortgage backed securities on its balance sheet. Looks like they're getting an emergency bailout from JPM and the Fed to help pump some liquidity back in. This is not what we needed right now, just when the market was about to bounce back from a bad couple of weeks. http://www.bloomberg.com/apps/news?pid=20601087&sid=aRJqeFvFizug&refer=home March 14 (Bloomberg) -- JPMorgan Chase & Co. and the New York Federal Reserve agreed to provide funding to Bear Stearns Cos. as the securities firm said its cash position has ``significantly deteriorated.'' The New York Fed will ``provide non-recourse, back-to- back'' financing for up to 28 days, JPMorgan said in a statement today. Bear Stearns fell $2.67, or 4.7 percent, to $54.33 at 9:37 a.m. in New York Stock Exchange composite trading. The shares are down almost 40 percent this year. ``Bear Stearns has been the subject of a multitude of market rumors regarding our liquidity,'' Chief Executive Officer Alan Schwartz said today in a separate statement. ``We have tried to confront and dispel these rumors and parse fact from fiction. Nevertheless, amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated.'' Bear Stearns had denied this week that it faced a cash shortage, saying the company's ``liquidity cushion'' is sufficient to weather the credit-market contraction.
yeah, some of the traders and my boss at my job have been following this since Tuesday. crazy, their stock has been going up and down they were trying to say they didn't have a problem.
Lots of rumors they are going under... and won't be the last. Any rally these days is akin to whistling past the graveyard. Hold onto your hats boys. As we say when a fire is on the brink of blowing up, "It's about to get Western!"
I'm temping at Bear right now- I've been temping here on and off for 4 years. I haven't been out and about much yet but obviously... there's a lot of concern here. Things were bad enough after the hedge fund collapse in August. In Jan/Feb I got just a few days of work total. A couple of folks here were a little angry because the liquidity issue wasn't an issue- just a rumor. But rumor was enough to make the stock nosedive. Ouch.
I talked midlevel guy at a top level firm this week who told me his bosses were preparing for a major bank to go under. He didn't say which one and didn't say Sterns just that there were too many big banks in bad shape to extend liquidity to all of them. When screwups get as big as the Subprime Mortgage situation some heads will fall. (to land softly in the basket with their golden parachutes)
it will be interesting to watch in the coming weeks. i will be curious to see if jp morgan will attempt a buy under for bear. you would have to think that if jp bought them cheap then a lot of bear's problems with investors wanting to withdraw money (which was the main reason for the drop) and their problems with other companies not wanting to trade with them would be solved. it could certainly be a steal for jp morgan.
I thought there was a chance of a bank going under. I didn't think Bear would be in that much trouble, they didn't write off as much as Citigroup and others.
My boss and I were talking about this today...More and more will come out, IMHO... We believe alot of this is not only due to the tons of people who shouldn't have gotten a loan in the first place, but also for those companies who bought bad loans without doing enough due diligence...
Citi and some of the other larger banks have had liquidity pouring in from international investors (Dubai) which has helped them get through this crisis. Smaller outfits like Bear didn't have this luxury, so they had to do the walk of shame to the Fed for the bailout.
I thought Citi would have more problems, they are so huge and unwieldly, but I didnt think about the Dubai investors. And I'm surprised Bear isn't big enough to attract foreign investment. I mean, it's still the 5th largest US bank.
Bear is still pretty big, but foreign money tends to favor Citi and the others since they still hold more diversified assets and are a safer investment. Also, investors might be weary of Bear since last year's hedge fund debacle, when two of their CDO based funds went into default.
