LIVE BLOGGING BEAR STEARNS: Bear Stearns Gets NY Fed, JP Morgan Bailout

Friday, March 14, 2008 | 09:41 AM

LIVE BLOGGING BEAR STEARNS:  (in reverse chronological order)Bsclogo






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5:00pm Final Price:  $30 even, down -27.00 (-47.37%) 
Total Volume:  186,986,843  (avg vol = ~12m)

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2:30:  S&P Cuts Bear Stearns' Rating    http://biz.yahoo.com/ap/080314/bear_stearns_ratings.html?.v=1
(Talk about late to the party!)

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2:15:   148 million shares in Bear Stearns

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12:54 "bridge" to other solutions including strategic alternatives (they are shopping themselves);  Earnings moved up Monday

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12:40:  Bear Stearns conf call is busy -- cant get on call --  800-374-2412 -- Live stream anywhere?

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11:00: Whew!  That was fun, but I have work to do -- live blogging over
Feel free to play in comments.

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10:59:  CNBC reports that BSC is actively being shopped to JPM and others -- if they do get bought, you can expect huge layoffs.

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10:58:  Shameless Self-promotion: Here was our most recent FusionIQ rank on Bear -- Sell @ $75 -- less than 2 weeks ago.

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10:57:  Dunno why this reminds me of that, but there was a great episode of Coupling on BBC -- The Melty Man Cometh  -- kinda reminds me of BSC today.  (For more on Coupling, see this post)

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10:56:  My office is 2 blocks from Bear's HQ. I should walk over and make a bid for their building, which is really nice.

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10:53: Bear hits new low $26.85 at 10am  (late prints everywhere) -- BSC at $32
Markets recover somewhat -- Dow off 130

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10:49  Some of their directors have options to buy at $79.86

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Bsclogo10:48:  I've always really like the Bear logo:
Here's the firm's about page

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10:46:  Jim Rogers comments to Short all investment banks looks pretty spot on.

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10:44:  So much for the recovery -- Dow off 200

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10:42:  For you numerologists: Bear at $28, down $28 -- a two one for one split

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10:40:  Groundhog Day: All we've done is guarantee 6 more months of this exact same thing. I hope I am alive when the post-mortem is written on this 50 years hence. I suspect it will be rather  critical.

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10:38:  When I whine about Socialism, this is EXACTLY what I am referring to. Instead of letting Bears Stearns get crushed, and then see the assets and talent pool get scooped up by someone else, we keep a wounded Bear on life support hanging around . . .  My preference is creative destruction.

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10:36:  Welcome to Bailout City!

Now you know: BSC is considered to big to fail.

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10:33: If you are wondering WTF a non-recourse, back-to-back financing is, pull up a chair: 

JPM gets to go the the Discount Window and borrow all the greenbacks they want;  Then they loan that to Bear.  In the event that Bear defaults, the NY Fed cannot go back to recover from JPM -- hence, non-recourse.

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10:32  SEC statement   Washington, D.C., March 14, 2008 

The Securities and Exchange Commission today issued the following statement regarding The Bear Stearns Companies:   “The Securities and Exchange Commission has been in close contact with the Department of the Treasury, the Federal Reserve, and the Federal Reserve Bank of New York during discussions concerning an agreement by J.P. Morgan Chase & Co. to provide a secured loan facility to The Bear Stearns Companies.  We will continue to work closely together in a way that contributes to orderly and liquid markets.”

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10:32:  Fed Statement  (10:32 release time)

The Federal Reserve is monitoring market developments closely and will continue to provide liquidity as necessary to promote the orderly functioning of the financial system     http://www.federalreserve.gov/newsevents/press/monetary/20080314a.htm

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10:31:  Here's the JPM press reslease

JPMorgan Chase and Federal Reserve Bank of New York To Provide Financing To Bear Stearns
http://biz.yahoo.com/bw/080314/20080314005430.html?.v=1

JPMorgan Chase & Co. (NYSE: JPM - News) announced that, in conjunction with the Federal Reserve Bank of New York, it has agreed to provide secured funding to Bear Stearns, as necessary, for an initial period of up to 28 days. Through its Discount Window, the Fed will provide non-recourse, back-to-back financing to JPMorgan Chase. Accordingly, JPMorgan Chase does not believe this transaction exposes its shareholders to any material risk. JPMorgan Chase is working closely with Bear Stearns on securing permanent financing or other alternatives for the company.

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10:29: Here's the link tot he 9:21 press release from Bear

Bear Stearns Agrees to Secured Loan Facility with JPMorgan Chase
http://biz.yahoo.com/bw/080314/20080314005441.html?.v=1

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10:26:   Bear Stearns Press Release:

"We have tried to confront and dispel these rumors and parse fact from fiction," CEO Alan Schwartz said in a release. "Nevertheless, amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated. We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations."

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10:25:  Dow off 100 -- things seem to be stabilizing -- what a wild ride

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10:20 Dow recovers . . .  off 126

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10:15: No NY Fed statement released as of 10:15 yet . . .

Lots  of good quotes on the Bear Stearns site -- too mean to post here, but go have some fun clicking around.

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10:12:  Seemed to have stabilized at $35-36  -- At 45 minutes into trading, they have traded over 52 million shares

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10:11 No Federal Reserve Press Release on this?  I better check the NY Fed site . . .

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10:08:  Turns out Richard Bove was right -- the Fed action on Tuesday ABSOLUTELY WAS to rescue Bear Stearns . . .
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10:05:  Bear = $34 -- $7 bucks off the 26.85 low

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10:03:  Thought: Bear denied on CNBC they had any liquidity concern. (Bear Stearns CEO:  No Liquidity Crisis for Firm).  liars.

Financial institutions have been issuing denials about the credit crunch for for over 12 months now -- all of them full of shit.  Once again, we learn you cannot trust managements to tell the truth -- especially in a crisis!

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10:00:   Amazing freefall

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9:50:  Dow off 300 points, Nasdaq off 58

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9:59:  BSC = $30 Down  $28 off 45%

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9:58:  Bear down $26 -- off 40%

Dow off 200

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9:56:  Down $18

Market is down 160 -- Goldman, others under pressure

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9:53:  Down $20

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9:51:  Down $19 -- its gonna be halted soon -- $38.50

As we discussed last night, liquidity concerns about Bear Stearns (BSC) have been validated.

The NY Federal Reserve Bank, and JP Morgan (JPM) have agreed to provide secured funding to Bear and an initial period of up to 28 days. JPM is working with Bear to secure permanent financing or other alternatives for them.

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9:49:  Bear is down 15, $42 and falling fast. 25 million shares traded in 20 minutes

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9:48: Doug Kass asks a good question:  "If Bear Stearns (BSC) requires a temporary bailout, did the company's management fib in its recent CNBC interview?"

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Quick Headline roundup:

Yes, Bear Stearns Is Having Liquidity Issues Wall Street Journal

Bear Stearns Options Show Higher Odds Stock Headed for `Zero' (Bloomberg)

Bear admits its liquidity 'significantly deteriorated' (MarketWatch)

Bear Stearns In Crisis Forbes

Bear Stearns gets Fed funding, shares plummet Guardian, UK  

Investment banks down after Bear Stearns gets financing from ... CNNMoney.com

Market slides on Bear Stearns liquidity issues Reuters

Should Alan Schwartz Sell Bear Stearns?  (WSJ)

Gold Futures Rise to Record $1009 on Bear Stearns Bailout (Bloomberg)

Bear Stearns shares plunge as it seeks emergency funding

Bear Stearns to Get Backing From J.P. Morgan, N.Y. Fed (WSJ)

Bear Stearns to Get Backing from J.P. Morgan, N.Y. Fed (Bloomberg) 

Bear Stearns Stock Plunges Amid Risk Worries

Bear Stearns `Undermines Credibility of Issuers,' Pollack Says Bloomberg

Friday, March 14, 2008 | 09:41 AM | Permalink | Comments (140) | TrackBack (0)
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Comments

Ohhh...look at that domino...it's falling, falling, falling...

This bull is going to have to climb a wall of insolvency.

Posted by: American ZIRP | Mar 14, 2008 9:48:24 AM

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