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Bear Stearns Companies Inc.

Self Description

March 2008: "JPMorgan Chase & Co. (NYSE: JPM) announced it is acquiring The Bear Stearns Companies Inc. (NYSE: BSC). The Boards of Directors of both companies have unanimously approved the transaction.

The transaction will be a stock-for-stock exchange. JPMorgan Chase will exchange 0.05473 shares of JPMorgan Chase common stock per one share of Bear Stearns stock. Based on the closing price of March 15, 2008, the transaction would have a value of approximately $2 per share.

Effective immediately, JPMorgan Chase is guaranteeing the trading obligations of Bear Stearns and its subsidiaries and is providing management oversight for its operations. Other than shareholder approval, the closing is not subject to any material conditions. The transaction is expected to have an expedited close by the end of the calendar second quarter 2008. The Federal Reserve, the Office of the Comptroller of the Currency (OCC) and other federal agencies have given all necessary approvals.

In addition to the financing the Federal Reserve ordinarily provides through its Discount Window, the Fed will provide special financing in connection with this transaction. The Fed has agreed to fund up to $30 billion of Bear Stearns' less liquid assets.

"JPMorgan Chase stands behind Bear Stearns," said Jamie Dimon, Chairman and Chief Executive Officer of JPMorgan Chase. "Bear Stearns' clients and counterparties should feel secure that JPMorgan is guaranteeing Bear Stearns' counterparty risk. We welcome their clients, counterparties and employees to our firm, and we are glad to be their partner."...'

February 2002: "The Bear Stearns Companies Inc. (NYSE: BSC) is the parent company of Bear, Stearns & Co. Inc., a leading global investment banking, securities trading and brokerage firm. Since 1923, we have helped corporations, institutions, governments and individuals reach their financial objectives."

Third-Party Descriptions

January 2013: "Moreover, instead of using the bailout money as promised – to jump-start the economy – Wall Street used the funds to make the economy more dangerous. From the start, taxpayer money was used to subsidize a string of finance mergers, from the Chase-Bear Stearns deal to the Wells Fargo­Wachovia merger to Bank of America's acquisition of Merrill Lynch. Aided by bailout funds, being Too Big to Fail was suddenly Too Good to Pass Up."

May 2010: "Goldman, however, benefited from the problems its securities helped to create, Congressional documents show. Around the same time that Bear was investing in Timberwolf, Goldman was placing a bet that Bear’s shares would fall. Goldman’s short position in Bear was large enough that it would have generated as much as $33 million in profits if Bear collapsed, according to the documents."

May 2010: '“The market’s loss of confidence, even though it was unjustified and irrational, became a self-fulfilling prophecy,” Mr. Cayne’s testimony says. Before they ran into trouble, both Bear Stearns and Lehman Brothers created so-called shadow financial vehicles. In 2001, Bear Stearns publicized a vehicle that it set up for its clients called Liquid Funding. Around the time, Lehman forged a close relationship with a small firm called Hudson Castle, which helped Lehman finance itself.'

April 2010: "The Securities and Exchange Commission is examining various creative borrowing tactics used by some 20 financial companies. A Congressional panel investigating the financial crisis also plans to examine such deals at a hearing in May to focus on Lehman and Bear Stearns, according to two people knowledgeable about the panel’s plans."

July 2008: "Talk of adequate capital also brings to mind comments made last March, when Bear Stearns was on the ropes, by Christopher Cox, the chairman of the Securities and Exchange Commission. He tried to calm investors by telling them that Bear Stearns passed financial muster. Days later, the firm was toe-tagged."

July 2008: "Last weekend, Bernanke offered Fed lending to the housing finance companies Fannie Mae and Freddie Mac and did not resist in gaining a new role for the Fed in setting those firms' capital requirements. In March, the Fed engineered the buyout of Bear Stearns and offered emergency lending to all investment banks."

July 2008: "Since Bear Stearns collapsed and was acquired by JPMorgan Chase, many Wall Street executives have argued that short sellers are going beyond legitimate methods and planting false information to cause shares to fall so that they can profit. Proffering false information or manipulating the market is illegal."

July 2008: "Since the almost overnight collapse of Bear Stearns earlier this year, top-level Wall Street executives have been pleading with regulators to investigate what they see as efforts by short sellers to plant false information and profit from it."

July 2008: "Though foreign accounting standards are stronger in some ways than American accounting principles, they are weaker in some important areas. They enable companies, for example, to provide fewer details about mortgage-backed securities, derivatives and other financial instruments at the center of today’s housing crisis and that have troubled many Wall Street firms, including Bear Stearns."

June 2008: "Mr. Geithner, 46, has been at the center of a closely watched policy debate that arose from the ashes of Bear Stearns, the venerable investment bank that nearly defaulted at the height of the winter’s credit crisis. The Fed’s bailout of Bear, orchestrated by Mr. Geithner, raised questions about the appropriate role of the central bank in mitigating financial crises, namely the extent of supervision that should be extended over private banks."

March 2008: "predicts that in future senior executives will face the prospect of some of their bonuses being contingent on the bank's performance over several years. Yet to the extent that many senior bankers are paid in shares they cannot immediately sell, they already are. And to the extent that Bear Stearns's employees owned one-third of the firm, they already looked to the longer term."

March 2008: "How can one feel sorry for James Cayne? The potential losses of the chairman and former chief executive of Bear Stearns must rank up there with the biggest in modern history. The value of his stake in Bear Stearns collapsed from about $1 billion a year ago to as little as $14 million at the price JPMorgan Chase offered for the teetering bank on Sunday."

March 2008: "Bear Stearns averted filing for bankruptcy by agreeing to sell itself to J.P. Morgan Chase & Co., which will assume the firm's trading obligations. As a result, clients with brokerage accounts at Bear, which is mainly an institutional firm but oversees some individual assets, will eventually see their accounts and assets transferred to J.P. Morgan. Like Bear, Lehman Brothers, which saw its stock tumble by 19% yesterday amid concerns the investment bank may also face funding problems, caters mostly to wealthier individual investors."

July 2007: But now Bear Stearns has finally joined the club. Last month, facing a crisis at two large hedge funds run by its asset management unit, Bear Stearns agreed to bail out one of the funds (and its many creditors) by providing a $1.6 billion line of credit. The move, intended to spare Bear Stearns embarrassment and protect the reputation of its asset management business, also had a take-one-for-the-team result. It insulated fellow Wall Street firms from losses and prevented widespread damage to similar hedge funds.


RoleNameTypeLast Updated
Financial Recipient from (past or present) Federal Reserve System (FED) Organization Mar 18, 2008
Owned by (partial or full, past or present) JPMorgan Chase & Co. Organization Mar 18, 2008
Organization Head/Leader (past or present) James "Jimmy" Cayne Person Mar 21, 2008
Organization Executive (past or present) Ralph R. Cioffi Person Dec 18, 2008
Organization Head/Leader (past or present) Employee/Freelancer/Contractor (past or present) Alan "Ace" C. Greenberg Person Oct 29, 2010
Organization Executive (past or present) Matthew Tannin Person Dec 24, 2008

Articles and Resources

34 Articles and Resources. Go to:  [Next 14]

Date Resource Read it at:
Feb 27, 2013 Why It’s Smart to Be Reckless on Wall Street

QUOTE: That asymmetry in pay (money for profits, flat for losses) is the engine behind many of Wall Street’s mistakes. It rewards short-term gains without regard to long-term consequences. The results? The over-reliance on excessive leverage, banks that are loaded with opaque financial products, and trading models that are flawed. Regulation is largely toothless if banks and their employees have the financial incentive to be reckless.

Scientific American
Jan 04, 2013 Secret and Lies of the Bailout:The federal rescue of Wall Street didn’t fix the economy – it created a permanent bailout state based on a Ponzi-like confidence scheme. And the worst may be yet to come

QUOTE: Not only did [the 2009 banking system bailout--Ed.] prevent another Great Depression, we've been told, but the money has all been paid back, and the government even made a profit. No harm, no foul – right? Wrong. It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences.

Rolling Stone
Apr 27, 2011 A.I.G. to Sue 2 Firms to Recover Some Losses

QUOTE: A.I.G. is preparing several suits against banks, like Bank of America and Goldman Sachs, that created the $40 billion in mortgage bonds… The company says it believes the banks issued misleading statements about the quality of the mortgages within those bonds.

New York Times
Dec 22, 2010 N.Y. Attorney General Cuomo sues Ernst & Young, alleging Lehman accounting fraud

QUOTE: The big accounting firm Ernst & Young helped Wall Street investment bank Lehman Brothers conceal its deteriorating financial condition before Lehman's historic collapse, New York Attorney General Andrew Cuomo charged...

Washington Post
May 18, 2010 Clients Worried About Goldman’s Dueling Goals

QUOTE: Goldman’s bets against WaMu, wagers that took place even as it helped WaMu feed a housing frenzy that Goldman had already lost faith in, are examples of conflicting roles that trouble its critics and some former clients. While Goldman has legions of satisfied customers and maintains that it puts its clients first, it also sometimes appears to work against the interests of those same clients when opportunities to make trading profits off their financial troubles arise.

New York Times
May 04, 2010 Crisis Panel to Probe Window-Dressing at Banks

QUOTE: It’s an open secret on Wall Street that many big banks routinely — and legally — fudge their quarterly books. But now Washington is taking a hard look at a range of maneuvers that help banks dress up their financial statements, and raising some uncomfortable questions about banks’ bookkeeping.

New York Times
Apr 12, 2010 Lehman Channeled Risks Through ‘Alter Ego’ Firm

QUOTE: It was like a hidden passage on Wall Street, a secret channel that enabled billions of dollars to flow through Lehman Brothers. In the years before its collapse, Lehman used a small company — its “alter ego,” in the words of a former Lehman trader — to shift investments off its books.

New York Times
Aug 17, 2009 Tax Bills Put Pressure on Struggling Homeowners

QUOTE: in recent years struggling cities and counties have sold their delinquent tax bills to the highest bidder... But housing advocates say the private companies may be exacerbating the foreclosure crisis, pushing out homeowners faster than would governments, which are increasingly concerned about neighborhoods becoming wastelands of abandoned properties.

New York Times
Aug 05, 2009 Despite Bailouts, Business as Usual at Goldman

QUOTE: Goldman [Sachs] executives are dismissive, even defiant, when critics argue that the bank is playing a heads-we-win, tails-you-lose game with American taxpayers. And yet the questions keep coming.

New York Times
Aug 02, 2009 Computer-trading worries grow as NYSE builds new datacenter

QUOTE: Not everyone is happy that the NYSE is poised to massively boost the already overwhelming amount of computer trading. At issue is not the simple fact of computers trading against one another over electronic networks—it's the speed with which they appear to be squeezing the humans out of the loop, and the potential instability and fragility that may result from increased automation of global markets.

Ars Technica
Dec 21, 2008 Even Bernard Madoff Doesn't Deserve This

QUOTE: when it comes to large-scale frauds involving public companies and their millions of shares, the guidelines' grounding in mathematics sometimes results in sentences that are, quite literally, off the charts. They fall within the realm of prison terms usually reserved for Mafia bosses, major international drug lords, cop killers, child molesters and terrorists.

Washington Post
Oct 30, 2008 Bonus Backlash Brewing

QUOTE: The very people who brought us the global financial crisis are now getting ready to reward themselves for a job well done. Meanwhile, of course, there's another wrinkle: American taxpayers now have stakes in all these firms, which we got for saving many of them from collapse.

Sep 19, 2008 The corporate financiers are wrong. Would they please shut up about the wonders of an unfettered free market? It's taxpayers who are paying the price for their greed -- again.

QUOTE: It was a jackpot for the crooks who took over the thrifts, milked their assets and drove them into bankruptcy -- and for the political cronies of the Republicans who eventually swept up the remains in profitable work-out deals with the government. It was not a jackpot for the taxpayers, who ate the trillion-dollar bill for cleaning up the fiasco and taking over the bad debts because ... well, because someone had to pay the price.

Jul 17, 2008 Fed's Crisis Role Spurs Questions of Overreach

QUOTE: "The Federal Reserve has re-created itself," said Vincent Reinhart, a senior staffer at the Fed until last summer who is now a resident scholar at the American Enterprise Institute. "And if you do more things, you set yourself up to have to choose among them and trade off. What happens when concern for housing finance conflicts with the need to pursue price stability?"

Washington Post
Jul 16, 2008 S.E.C. Unveils Measures to Limit Short-Selling

QUOTE: The Securities and Exchange Commission, under pressure to respond to the tumult in the financial industry, announced emergency measures on Tuesday to curb certain kinds of short-selling that aims at Fannie Mae and Freddie Mac, as well as Wall Street banks. The chairman of the S.E.C., Christopher Cox, said the commission would institute an order to limit the ability of traders to bet against the shares of Fannie and Freddie, the mortgage finance giants, which plunged again on Tuesday.

New York Times
Jul 14, 2008 S.E.C. Warns Wall Street: Stop Spreading the False Rumors

QUOTE: The Securities and Exchange Commission announced on Sunday that it and other regulators would begin examining rumor-spreading intended to manipulate securities prices. The timing of the announcement, made before the markets opened in Asia, was meant to warn broker-dealers, hedge funds and investment advisers to quell any spreading of rumors before trading started Monday.

New York Times
Jul 13, 2008 The Fannie and Freddie Fallout (Fair Game)

QUOTE: This wasn’t the way the “ownership society” was supposed to work. Investors weren’t supposed to watch their financial stocks plummet more than 70 percent in less than a year. And taxpayers weren’t supposed to be left holding defaulted mortgages and abandoned homes while executives who presided over balance sheet implosions walked away with millions.

New York Times
Jul 05, 2008 Accounting Plan Would Allow Use of Foreign Rules

QUOTE: But critics say the changes appear to be a last-ditch push by appointees of President Bush to dilute securities rules passed after the collapse of Enron and other large companies — measures that were meant to forestall accounting gimmicks and corrupt practices that led to those corporate failures. Legal experts, some regulators and Democratic lawmakers are concerned that the changes would put American investors at the mercy of overseas regulators who enforce weaker rules and may treat investment losses as a low priority.

New York Times
Jun 09, 2008 Derivatives Trading Is Scrutinized

QUOTE: One of the nation’s top central bankers called Monday for a significant overhaul in regulation of the financial industry, declaring that the current system of supervision is confusing and susceptible to “perverse” abuses. The official, Timothy Geithner, the president of the Federal Reserve Bank of New York and one of the chief architects of the Bear Stearns bailout, said banks and government regulators must take pre-emptive steps to prevent future disruptions from snowballing into crises.

New York Times
Jun 08, 2008 Pay It Back if You Didn’t Earn It (Fair Game)

QUOTE: Although pay for nonperformance — or even failure — seems an obvious no-no, shareholders have had to push hard in recent years to have companies institute such provisions. The data on the growing acceptance of clawback provisions emerged in a study by the Corporate Library, an independent research concern specializing in executive pay and corporate governance.

New York Times

34 Articles and Resources. Go to:  [Next 14]