Bear Stearns Gets Emergency Bailout From JP Morgan and Fed
Firm Will Continue to Do Business Under Name of JP Morgan, Bear Stearns and Bernanke
One of Wall Street’s top investment banks, Bear Stearns, was forced to go begging to rival J.P. Morgan Chase and the Federal Reserve Bank in an effort to stay in business.
Clutching a hand-lettered sign that read, “Will Do Leveraged Buy-Out for Food,” the long-time financial powerhouse finally admitted that it was in serious financial straits after a week of denials.
The Fed-assisted bailout was the last option for Bear Stearns after investment bankers worked tirelessly for three days straight begging for change on the Wall Street subway platform.
One Bear Stearns executive confided, “I collected $23.75 over the course of two days but, in the end, it just wasn’t enough.” The investment banker went on to say, “I’m not proud of what I had to do for that last 75 cents, either.”
Treasury secretary Paulson praised the Fed for its quick action and urged stiffer penalties for traders at other firms who took advantage of Bear Stearn’s inexperienced staff of MBAs and PhDs.
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“Buddy, can you spare $200 billion in a low-interest capital infusion with an option to refinance?”
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I keep hearing news people say that B.S.’s “liquidity has eroded rapidly.” WTF does that mean? Isn’t that the same thing as saying that you’re running out of cash? Why don’t they just say that?
First, JPMC is not a rival, but a complicit business parter with the dying Bear… If they were a rival, they would have laughed with glee as the Big Bear died and then had the Bear skinned; eaten it’s meat; placed the Bear rug oh Jamie Dimon’s office floor; and mounted Bear’s head (and maybe Ace’s too) in family room at his home.
No, JMPC did not do what they did to help Bear, they did it to help themselves and others in this complicit OPAQUE marketplace which as been note laundering and selling worthless “digital paper” for over a decade now. JPMC is just there to “lend” a helping hand to conceal and mask it’s own culpability and protect its ASSets!
You see, Bear Stearns, with the help of BankOne/JPMC (who was trustee on much of its paper MBS products in the beginning) built it’s fixed income business on the backs of EMC Mortgage (and subprime b/c paper borrowers) which was formed in the early 90s to service scratch and dent loans from the RTC and then others. Bear’s model was to buy back loans from Savings and Loans in the early 90s such as Home Savings of America and package them into securitizations via conduits it created to fulfill the market demand it created. Bear was one of the leading forces, along with Lehman, in buying these distressed assets then keeping the servicing at it’s EMC unit in Dallas where very aggressive special servicing techniques would extract “net liquidation proceeds” (i.e. equity stripping by foreclosure of homes) and EMC and Bear would then pay investors high returns on their MBS/CDO products.
However, as the courts and regulators began to catch up on the schemes and home values fell, rather than rose, Bear’s very aggressive predatory servicing model could no longer rob Peter (borrower) to pay Paul (investors) and the ponzi-like scheme dried up since there was no more cash flow to extract from it’s servicing portfolio since borrowers were upside down on their mortgages and EMC could not hold onto the distressed servicing portfolios and after Bear’s Hedge Funds Imploded and the market reality realized that they had been sold a bag of goods and no one knew who owned what [borrowers not told who the real holder of their notes were and investors didn't know what notes and mortgages they did own] caused wide-scale panic and foreign investments and pension funds quickly realized that there is no such thing as the goose that laid the golden egg, just the Bear that took several “dumps” along the way in the woods of securitization on the way to leaving a trail for all investors and borrowers to untangle and unravel in courts in the days, weeks, months, and years to come.
No one questioned how a stock in the low teens in the early 90s (except a few of us) managed to give almost 100% annual returns until this past summer. Now, all that is left is a wounded and soon to be dead bear in the woods with the vultures circling to split apart the carcass left.
Do a search for a report called “PredBear.pdf” for more details!