Bear Dead at 85

(Newser) - Investors have lost some $9 trillion since last year’s stock market peak, but at the center of the maelstrom, CEOs of some of the worst-performing companies are sitting pretty. Fifteen financial services and homebuilding CEOs have accumulated more than $100 million each in the past 5 years in cash compensation and stock sales, the Wall Street Journal reports. That includes the heads of Lehman Brothers, Bear Stearns, and other nearly bankrupt or deeply damaged companies. More »

(Newser) - More than $3 billion was paid to the chief executives of the five biggest financial firms on Wall Street in the run-up to the credit crisis, Bloomberg reports. While supervising bad mortgage-related credit bets that eventually brought the financial system to its knees, Merrill Lynch’s Stanley O’Neal took in $172 million in 2003-07, while Bear Stearns’ James Cayne took in $161 million. More »

(Newser) - All it took was a single anonymously sourced report Tuesday to send Lehman Brothers down about 50% in 15 minutes. This proves two things, writes Michael Lewis: The market is jittery, and “Lehman Brothers is doomed.” The big bank’s fate is sealed in part “because it still owns all sorts of crappy assets at inflated prices,” but also because people are enjoying watching its downfall. More »

(Newser) - Short-sellers have the power to utterly crush Lehman Brothers, as they did Bear Stearns, writes James Cramer in New York , but it's largely Lehman's own fault. Lehman shares much of the "mismanagement, arrogance and recklessness" that brought down Bear, Cramer opines in a piece that says excoriating short-selling hedge funds for running down Lehman stock, and accusing them of manipulation, misses the point. More »

(Newser) - Bear Stearns' collapse and shotgun marriage to JP Morgan were sparked by little more than a rumor, Vanity Fair reports. True, the investment bank had stumbled—a $1.6 billion bailout of troubled funds hurt its image—but whispers of liquidity problems were false: Bear had $18 billion in cash reserves. Now former executives and the SEC want to know who killed the company. More »

(Newser) - If the Fed hadn't taken the unprecedented step of helping bail out Bear Stearns, a sweeping "contagion" would have doomed the markets, its members say. In newly released minutes from its March 16 meeting, the Fed reasons that the “prominent position of Bear Stearns” left it no choice but to help JP Morgan's purchase, the Wall Street Journal reports. The minutes also reveal that JP Morgan was not the sole suitor—only the “most suitable,” and that fewer than five board members were in on the decision. More »

(Newser) - A pair of former Bear Stearns hedge-fund managers arrested today on federal fraud charges could be done in by an email in which one described their market position as "toast"—days before telling investors it was "quite comfortable." Matthew Tannin and Ralph Cioffi will be indicted later today in a collapse that cost investors $1.6 billion, the Wall Street Journal reports. More »

(Newser) - The buyout of Bear Stearns neared finality today with 84% of shareholders voting in favor of acquisition by JPMorgan Chase, the Wall Street Journal reports. Chairman James Cayne shared his feelings publicly with shareholders about the bank’s demise for the first time: "I personally apologize,” he stated, "I'm sorry. Words can't describe the feelings that I feel." More »

(Newser) - A former top-ranking Fed official has called the central bank's decision to bail out Bear Stearns its "worst mistake in a generation," the Wall Street Journal reports. The official, former chief of monetary policy, compares the hasty move to errors that helped trigger the Great Depression. He accused officials of ignoring other options, such as demanding more from buyer JP Morgan, seeking other suitors or removing certain assets from Bear's portfolio. More »

(Newser) - Hundreds of college grads who thought they had landed dream positions with Bear Stearns were canned before their first day on the job, the Wall Street Journal reports. As the giant bank began to implode, the students were at first assured their new jobs were safe—but then were sent packing to hunt for work along with 38,000 others recently let go by the financial industry. More »

(Newser) - Bear Stearns has been warned it could face civil charges stemming from an SEC probe into its anti-competitive bidding for municipal bonds, the Wall Street Journal reports. The firm is also being investigated by the FTC for alleged violations of consumer protection laws involving its mortgage-servicing unit. Bear Stearns officials said the company is co-operating with both agencies and the Department of Justice. More »

(Newser) - Bear Stearns shareholders are threatening to vote against its sale to JPMorgan, saying the $2 price per share for the nation’s fifth largest investment bank is unrealistic; speculators seem to agree, trading up Bear stock to $5.91 yesterday, a 23% bump. Expect some serious brinkmanship to force a higher offer or lure another bid, reports the Wall Street Journal . More »

(Newser) - Hank Paulson came closer than ever to conceding that the economy is in recession in a series of interviews yesterday, Reuters reports. Weary after a weekend in which he helped to broker Bear Stearns' fire sale to JPMorgan, the treasury secretary avoided the R-word but admitted: "There's no doubt that the American people know that the economy has turned down sharply. So to me much less important is the label that's placed on it today." More »

(Newser) - Bear Stearns shares jumped 23% today on hopes that stockholders will reject JPMorgan's bailout offer in favor of a higher offer, Bloomberg reports. The surge moved the price to nearly three times the current value of the fire-sale bid, which one major stockholder termed "derisory." "There's every incentive for shareholders to vote 'no' the first time," said one analyst. More »

(Newser) - After a collapse of confidence sank Bear Stearns last week, some traders are betting that Lehman Brothers will be the next victim of the credit crunch. Its stock went on a rollercoaster ride yesterday—plunging 40% at one point and closing down 19%, the biggest fall since the firm went public. But analysts, wary of giving vultures more reasons to circle, are watching what they say about the brokerage firm, Marketwatch reports. More »