digg

Join DiggAbout

Discover the best of the web!
Learn more about Digg by taking the tour.

Bear Stearns Closes in on Deal to Sell Itself to J.P. Morgan

online.wsj.com — Bear Stearns Cos. was closing in on a deal Sunday afternoon to sell itself to J.P. Morgan Chase & Co., as worries deepened that the financial crisis of confidence could spread if Bear failed to find a buyer by Monday morning.

Bury
show profanity settings
expand all
  • allenk77, on 03/17/2008, -24/+5Sorry, I hope that works out for everyone but me reading it or even knowing about will not matter.
  • jackielib, on 03/17/2008, -1/+54harsh.
    2 years ago: $150/share
    Friday morning: $50/share
    Frday afternon: $30/share
    Sunday evening: $2/share...mostly for the fancy headquarters.
    • daFilms, on 03/17/2008, -0/+1For those that like to play with charts (via Google Finance) - http://tinyurl.com/2r5v77
      a ONE year chart... $160 --> $30... *correction... $2

      --Google Discussions are 'interesting'
      ....Re: help! I bought 3000 shares 4 days and now I am getting these margin alerts? Hopefully this guy is not serious, BSC buyout at $2 a share....
    • sjl127, on 03/17/2008, -3/+7This is the result of America spending above their means, both in the private sector and the government sector. This is the textbook definition of bankruptcy.
      • sgiffy, on 03/17/2008, -3/+3Not really. Bear had assets they just had no cash.
    • deleo, on 03/17/2008, -0/+2This sale is horrible. Nobody on Friday even knew that Bear Sterns was in this bad of shape. What does it mean for the rest of Wall Street? Very nervous times are ahead.
    • crewsucks, on 03/17/2008, -0/+0From what I read, Bear Stearn's headquarters is worth 1.2 Billion, so the shareholders aren't even getting the full value of that. Bear Stearns is probably in the worst position of all of the big (well, formerly big) investment banks since their primary focus is debt. Wouldn't surprise me if they were holding the most toxic notes. These are interesting times.
      • LordRedSnake, on 03/17/2008, -0/+8That would just imply that Bear Stearns severely over-leveraged itself and its liabilities far outweigh its assets. BSC is the largest underwriter of mortgage backed securities so they've been more exposed to the toxic securities than other institutions. Regardless, this fire sale implies that all of the securities the company deals in are worthless. I personally think that notion is oversubscribed and JP Morgan is getting a hell of a deal. Bear Stearns just couldn't overcome the fear of the marketplace and convince anyone to continue to do business with them. This is the idea behind "we have nothing to fear but fear itself." Mere fears are bringing down multi-billion dollar empires.
      • Sagarian, on 03/17/2008, -0/+2Lehman is likely next.
    • rmxz, on 03/17/2008, -2/+1Of course ad 30 their stock's still comfortably above where it was in 1998.
      And even if they get bought for $2/share I've had plenty of stocks that did worse than this one.
      Why bail them out and not (enron, worldcom, etc)?
  • l33tn3rd, on 03/17/2008, -5/+30exactly how the rothchilds got control of england
    • Tehrooni, on 03/17/2008, -0/+3Can you elaborate on that please?
      • tba2287, on 03/17/2008, -7/+2Antisemitic rabble rousing?
        • nycmac247, on 03/17/2008, -1/+2Ahhh...have you taken the time to research?
      • grrrrrrrrrrrrrr, on 03/17/2008, -1/+6I'll try. Look here, @ the 58 minute to the approx 1:04 mark:
        http://video.google.ca/videoplay?docid=-5153195602 ...
        This video is great primer on the history of private central banking and of course thus a history of war itself.
        • Tehrooni, on 03/17/2008, -1/+4Thank you! I have to watch the whole thing now!
          Around the 1:11 mark, he talks about how recessions and depressions are started to force people into accepting things....
          Lubricate your asses people. Fun times beginning!

        • m0neybags, on 03/17/2008, -1/+2That's a great video.
    • MikeFallopian, on 03/17/2008, -3/+1OMG teh J0000zzzzz
  • mediaspree, on 03/17/2008, -3/+10glad Joe Rogan is up on the financial markets. I can sleep at night.
    • joerogan, on 03/17/2008, -3/+8Believe it or not...I have many interests that align with much of the Digg community.
      • TomK88, on 03/17/2008, -1/+1Can you prove that you're actually Joe Rogan?
        • wtfunkymonkey, on 03/17/2008, -1/+1Judging by the watermark on his profile pic I'd say no.
          • Charlotte_Web, on 03/17/2008, -0/+3And the account was created 4 days ago, and he claims to understand the Digg community already.
          • DrMonkeyLove, on 03/17/2008, -0/+1Eh, what's to understand? Diggers don't have girlfriends, love Ron Paul, hate Hillary Clinton, hate Scientology, love atheists, and all have a complete and total understanding of the world's economy. That about sums it up...FTW!
        • knelto, on 03/17/2008, -0/+2Believe it or not...he's giving away a ***** sensory deprivation tank! He submitted it on here a few days ago. I think it's him dude.
        • deMonkey, on 03/17/2008, -0/+3http://forums.joerogan.net/showthread.php?t=68255
          'The poster is "joerogan" which is kinda flattering and creepy at the same time since it's not actually me, but whoever it is, thanks for posting it!'
    • NinjaBoy, on 03/17/2008, -2/+2lies.......you get sex
  • emmanuelsotelo, on 03/17/2008, -6/+15This is better than having the Fed/US Government give them free cash.
    • Manchowder, on 03/17/2008, -1/+9But they did.
      Fed gave a non recourse loan to JPM.
      JPM bought out Bear at
      • sgiffy, on 03/17/2008, -0/+1JPM will now repay the loan to the fed to get the collateral back.
        • Tehrooni, on 03/17/2008, -0/+5But JPM is still guaranteed up to $30 Billion of bad mortgages by the Feds.
    • widgetmaker, on 03/17/2008, -2/+5Uh the gov is giving them cash/underwriting massive loans. Good thing as well, rather that than letting the whole financial system collapse.
  • rzxc, on 03/17/2008, -3/+26Monday is going to be bad. Real bad. Luckily, there are limits to how much the market can lose before trading is stopped. There's no doubt we're going to hit those tomorrow. Selling a company that traded at $170 a share for $2 a share is basically the same as bankruptcy. You get about 1 percent of your investment instead of 0 percent. So basically, you did 1 percent better than bankruptcy. To me, there's no difference. Actually, I was thinking about buying a few shares of Bear Sterns at $30. Luckily for me, I resisted the temptation.
    • Lewie, on 03/17/2008, -0/+1I was thinking about shorting it at $30...too bad I didn't.
    • MrBlue999, on 03/17/2008, -0/+7The Fed will intervene, dropping dollars out of a helicopter if necessary, to avoid any kind of sharp drop.
    • enki25, on 03/17/2008, -1/+4Well, in this case 1% is about $276M, a hell of a big difference between that and 0. The whole point of this sale was to try to stop the bleeding. At this point we should all be hoping it doesn't spread to JP Morgan. As bad as things are now, it can always get worse.
      For some reason I keep thinking of that scene in Sneakers where they're talking about how you can make banks fail just by spreading the word that the bank is already failing. In this case the opposite has happened, failing banks have been propped up by positive propaganda.
      Yeah, Monday is going to be pretty ***** bad.
  • nalimca, on 03/17/2008, -1/+8Yeah, let's see JP Morgan save America again since 1895. Isn't $65 million enough this time?
  • Kronk42583, on 03/17/2008, -2/+4this is kindof scary situation. bear stearns isn't the only company whos heavily invested in mortgages, including JP Morgan... on another not, i'm a realtor, and if you want to buy a house and have 20% to put down, its not going to get much better than this... just don't get an Adjustable rate.... go fixed. if more people had done that this problem would be a lot smaller.
    • BklynPirate, on 03/17/2008, -1/+2JPMorgan seems to be weathering the mortgage crisis just fine. What are you talking about?
      • Sagarian, on 03/17/2008, -0/+6Pssst. Kronk revealed that s/he is a realtor. that's your first tip that s/he knows nothing about real estate or finance...
    • kazamx, on 03/17/2008, -0/+2Where on earth do you get the idea its not going to get much better than this? The prices of homes are going to keep falling over the next year or two at least. There is massive oversupply in the market both in the form of brand new houses and used homes people can no longer afford coming back on the market.

      There is a much better time to buy a home today and that is tomorrow, even better than that is the day after that, and the day after that. WAIT, screw the realtor needing a sale, save yourself thousands and wait another year.
  • dupswapdrop, on 03/17/2008, -4/+12Lets see this free market in action. When they are raking in the cash it's great. But the minute they start losing money it's time for the government welfare to kick in!
    • Tehrooni, on 03/17/2008, -1/+7It's called privatizing profits and democratizing loses.
    • whataboutdave, on 03/17/2008, -1/+8This may come as a shock to you, but the US economy - like nearly every other one in the developed world - is a "mixed economy". There are both market and control elements.
      • kazamx, on 03/17/2008, -1/+3Most Americans can't see all the socialist policies they have. SHHHH don't tell them state run schools are socialist.
        • DanOnTheMoon, on 03/17/2008, -0/+3Believe me, I KNOW the schools are Socialist. I went to one.
    • LordRedSnake, on 03/17/2008, -1/+9This is hardly a good deal for Bear Stearns or its 14,000 employees, but the alternative was bankruptcy because nobody else showed up at the meeting to buy the firm except JP Morgan. The Fed is only involved to keep this crisis contained so investors don't start pulling their funds from other banks. When the financial system collapses it affects everyone. Mortgage rates have only gone up despite the Fed Funds rate going down, and further failures will only make that worse. If you're an individual or a small business, getting a loan with favorable rates isn't quite so easy these days.

      The goal here for the Fed isn't to give Wall Street CEOs golden parachutes, it's to keep the system running so normal people like you and I can still get loans, buy houses, and get on with our lives.
      • Xios117, on 03/17/2008, -1/+2Good, well thought out comment. Thank you.
    • logicet, on 03/17/2008, -0/+6This is not free market capitalism. This would not have been able to occur if we followed the Constitution and used real money of Gold and Silver. This fiat money bubble has been manipulated for a purpose. Look at who it benefits as it bursts...
      • DanOnTheMoon, on 03/17/2008, -2/+2Thank you. This is Corporatism - upside-down socialism, built on funny money and lobbyism. Instead of the government running the economy, the government subsidizes the entire economy and the companies use government force to achieve their goals. In essence, government and industry team up to ***** everyone.
      • mciampa1214, on 03/17/2008, -1/+2The former CEO of Bear Stearns lost $300+ million dollars in share value since the beginning of last week. He's hardly benefiting from this situation. The people this bailout benefits are regular people like you and me, because it prevents the entire system from collapsing.
  • gerbco, on 03/17/2008, -3/+5Makes you wonder about other valuations... looks like Mr. Greenspan and Mr. Buffet were right.. supply side what?
    • uptown, on 03/17/2008, -1/+5Greenspan helped create this mess by encouraging people to take out ARMs.
      • gerbco, on 03/17/2008, -0/+1It was a useful product that got abused by real estate agents and idiot home buyers to buy houses they couldn't afford. If you think its greenspans fault i got some daisies from the Netherlands that I would like to sell you.
  • fani, on 03/17/2008, -0/+11Tragic for all the employees - Bear has some kind of a profit sharing plan.
    Think of all the people who were at Bear for several several years putting in such hard work. Now those shares are so low in value.
    As eg. if you got say 1000 shares @ $160 last year around this time - you'd have $160,000. But today its $2000 ( @ $2/share )
    Tragic.
    Piss poor leadership at the top did Bear in. Remember the golf/bridge playing CEOs.
    Reminds me of Nero who played the fiddle while Rome burned...
    • sgiffy, on 03/17/2008, -0/+2Plus the firm really stressed employee ownership. 1/3 the company was held by its employees. Hope many can get jobs with JP.
      • Gerz1219, on 03/17/2008, -0/+2Unlikely. JPMorgan is buying Bear's absolute top talent and their brokerage business. Pretty much everything else is redundant garbage that Jamie Dimon, a ruthless penny pincher, will discard immediately. As fani noted above, this is really bad news for the employees. My mom got a lot of her compensation in stock, which is now worth less than toilet paper. Companies like Bear also outsource a lot of their services and use temps, so the actual number of people who are going to be out of work is likely much higher than the 14,000 listed in the article.
        • galore, on 03/17/2008, -3/+0"JPMorgan is buying Bear's absolute top talent"

          You mean the receptionists? Because it can't be the executives who sunk this ship.
          • Gerz1219, on 03/17/2008, -0/+2Bear's downfall was probably the result of a dozen or so people at the very top. The company still employs many hard-working and talented Ivy League analysts, associates, and managing directors. And yes, many hard-working receptionists and other support staff, who will now be out of a job thanks to managerial incompetence.

            Why are so many people celebrating Bear's downfall when the vast majority of its employees busted their ass for that company and did their job well? It's almost like you're happy that pretty soon there aren't going to be middle and upper-middle class people left in this country who can find work in the financial services sector.
          • sgiffy, on 03/17/2008, -0/+1Because there are a lot of disaffected people who are angry that others have good jobs while they hold down the fort at the 7/11. Instead of trying to do better with their lives they hatch crazy conspiracy theories and welcome economic disaster becasue they think it will prove them right.
    • dselliott, on 03/17/2008, -0/+3Its going to be tragic for the American economy. Guess who's going to foot the bill for this giveaway?
  • techweenie, on 03/17/2008, -4/+11Spitzer was about to blow the 'inside deal' that made this possible. Never stand in the way of billionaires connected to the administration.
    • uptown, on 03/17/2008, -3/+7Something of Spitzer's was about to be blown ... but I don't think an inside deal was it.
    • aboutlogin, on 03/17/2008, -1/+4getting rid of spitzer (on a dubious case at that) definitely makes it easier, it's ridiculous. $2/share is just stupid, if that valuation is right, then we should see others fall. thanks to the taxpayer, it doesn't look like jpm is taking much risk at all. what a deal, what a story. from government sponsored loan sharking to the political hit on spitzer, the economic hit on pension funds and the financial hit on bear stearns. i have to say it, these guys are good. they don't mess around.
  • suckmytuition, on 03/17/2008, -1/+3China got burned - http://www.bloggingstocks.com/2007/10/22/bear-stea ...
  • daFilms, on 03/17/2008, -3/+3Bulls and Bears Make Money! Pigs get Slaughtered!
  • godseyeview, on 03/17/2008, -1/+8just like how JP Morgan bought out banks and corporations for pennies on the dollar during the great depression. Its time for the devil to collect what is sown by the sweat of the gullible soul's brow. Fear the reaper.
  • uselessexpert, on 03/17/2008, -4/+16Our economy is in shambles!
    If Monday morning Bush and his staff don't think we are in a ***** recession, can someone please grab a Wall Street Journal and a Financial Times and stick one up his ass and the other down his mouth?
    • InorganicMatter, on 03/17/2008, -0/+2Recession: negative growth, aka shrinking, aka receding. Enough of the recession mongering.
      • kazamx, on 03/17/2008, -0/+2Come on, you know its coming. The only thing that has kept America going is increased borrowing, now the consumer is too scared to borrow more and is going to try to pay off debts. Watch the recession roll in.
  • teddtech, on 03/17/2008, -6/+5Capitalism at its finest!!!! Now who was it that was dissing socialism?
    • Lewie, on 03/17/2008, -1/+3Are you kidding? America is the greatest and richest country in the world!

      ...too bad only 1% of us are benefiting from it.
    • logicet, on 03/17/2008, -1/+2The Federal Reserve sure doesn't dis Socialism. Their goal is to usher in a new age of Socialism. What better way to do that then reposes America? Read your Communist Manifesto and you will see this is all part of the plan.
  • rowlodge, on 03/17/2008, -3/+4prepare "black Monday" coming..
  • lopla, on 03/17/2008, -10/+6America 2 words.

    Game Over.

  • marklittle, on 03/17/2008, -1/+3$2 a share is nuts. Any guesses as to who's next? Countrywide hasn't done too well for itself after getting bought by BOA...
    http://www.helocbasics.com/heloc-lending-standards ...
  • daFilms, on 03/17/2008, -1/+2Follow the markets of the world react...

    http://edition.cnn.com/BUSINESS/markets/


    • DLRULZ, on 03/17/2008, -0/+3Oh, ***** Asian markets are down by 5%, things will only get worse.
  • widgetmaker, on 03/17/2008, -6/+5To all the libertarians who think the government shouldn't intervene in cases like this you are wrong, better they do this for Bear Stearns than see the whole financial system go down the pan.
    • dselliott, on 03/17/2008, -4/+4The whole financial system is going "down the pan" anyway. This is just delaying the inevitable while the elite commit one more huge theft.
    • mirokoi, on 03/17/2008, -3/+5Ahem.. Bear Stearns isn't a bank and the whole system is going down the pan - we're just circling the bowl now. They haven't grown a conscience just this week. They aren't doing anyone any favors just yet. Or ever... These aren't chains.. it's jewelry.. see it's got my initials and my own number on it and everything.
    • thunked, on 03/17/2008, -2/+1Libertarians wouldn't have allowed this ***** to get out of control. House of cards real estate market. It's the liberals that would love to give illegal immigrants free homes and let them resell them for 100000% profit HAHAHA.
    • LordRedSnake, on 03/17/2008, -2/+4You need to take off your blinders before making sweeping, uninformed comments.

      How did this whole housing bubble and mortgage crisis come about? Ah yes, artificially low interest rates courtesy of the US Federal Reserve. Remember that? Government intervention back in 2001-2003 encouraged risky behavior on both the behalf of borrowers and lenders. Homeowners took out mortgages they couldn't afford and lenders lent to people who couldn't afford the loans.

      Libertarians don't believe in having some nebulous government entity intervening in the market and distorting people's incentives so much they no longer see reality. But now the Fed is slashing rates again and intervening on a level that hasn't been seen since the Great Depression. I hope in 7 years or so when the next bubble is bursting someone comes and diggs this up.
    • logicet, on 03/17/2008, -3/+4Libertarians would not have let the fiat credit bubble exist.

      This is not free market capitalism. This would not have been able to occur if we followed the Constitution and used real money of Gold and Silver. This fiat money bubble has been manipulated for a purpose. Look at who it benefits as it bursts...
  • n8o8, on 03/17/2008, -5/+5Wow, I am really afraid for tomorrow. Black Monday?
  • rroeserr, on 03/17/2008, -1/+3Its nice to see stuff on sale. This is the time to buy stocks....
  • serpentor, on 03/17/2008, -1/+8Bear owns their own building, and the building alone is worth more than the buyout value. This is effectively valuing Bear at *negative* $200mil! (which is probably correct as its derivative exposure is unknown except to JPM and perhaps the Federal Reserve)
    • BklynPirate, on 03/17/2008, -0/+2The building is worth 1 billion, according to the nytimes article.
    • diggerphelps, on 03/17/2008, -2/+4The "building" is only worth a lot in "real estate bubble" funny money.
      Which is the reason BSC is worthless.
      Kind of 'meta.'
      • mciampa1214, on 03/17/2008, -0/+2Except that the building is in ***** Manhattan not Ohio, so I'm pretty sure the value is doing just fine.
    • Sagarian, on 03/17/2008, -1/+3The big dealer in mortgage securities is itself being foreclosed on. Nice.
  • FizzanoMatrix, on 03/17/2008, -1/+1I heard J.T. Marlin was also putting in an offer as of last week. Still have yet to figure out from the inside if the books are cooked..
  • Trockmann, on 03/17/2008, -2/+2Asia market is down 4% tonight, gold up 3%, dollar against the yen down 3%.. oh and the Fed did an emergency discount rate cut of .25 tonight. And Bear Stearns share will be worth half as much as a Latte at a Starbucks on Madison Street. In fact it will take two shares to complete your purchase with tax. Looking for a Saint Patty's day massacre on Wall Street tomorrow. Sad what our country has become.
  • Look4Truth, on 03/17/2008, -2/+8$2 a share...$2 a share...

    Um...anyone else see a problem here? Hang on tight, things are about to unravel...
  • puma, on 03/17/2008, -3/+4here we go.. ok let's cue the fear mongering!
    let me guess... our world is ending tomorrow morning?
    • Onetrack, on 03/17/2008, -3/+5Its that whole ' if it doesn't directly affect me i don't care ' attitude that got the USA into this mess to begin with you stubborn bugger. When the US has no other choice but to hyper inflate the dollare and your wheelbarrow money you keep under the bed won't buy you a loaf of bread you'll be reminded that the entire community has been saying " I told you so " for years.
    • Trockmann, on 03/17/2008, -0/+0nope, only for the 14,000 Bear Stearns employees...
    • zephyrprime, on 03/17/2008, -0/+0not the world. just our wealth.
    • Manpage, on 03/17/2008, -0/+1I'm not saying that the world is going to end, but if I were a Lehman or Merrill stockholder, I might start worrying that my firm could be the next to fail.

      If you feel differently, you are free to invest. Just remember, there were a lot of people ignoring the Chicken Littles as they were buying Bear Stearns on Friday.
  • sndream, on 03/17/2008, -2/+3First libertarians don't oppose all government intervention, we just think it should be as little as possible. Also, I don't consider this as a huge government intervention, what the government spent on this deal won't cover a day of spending on the Iraq War.
    • Manpage, on 03/17/2008, -1/+2From the NY Times:
      'the Fed had agreed to fund up to $30 billion of Bear Stearns’s “less-liquid assets.”'

      That's far, far more than a day of Iraq war spending. This bailout sets an awful prescient. Capitalism depends on allowing bad businesses to fail.


  • zephyrprime, on 03/17/2008, -0/+6The only reason they even paid $2 was to prevent credit swap defaults from triggering in the even that BSC went bankrupt. JPM no doubt wrote a lot of those swaps themselves. Buying Bears at $2/share actually saves JPM money.
  • ZenMojo, on 03/17/2008, -1/+8I listened to the explanation for why my tax dollars covered this company: "So that other companies don't panic and start selling off their investment interests." Translation: Imply an open-ended opt-in to Wall Street welfare so rich people don't panic and make smart business decisions.
    *****' A. Bear and Stearns collapsing has no effect on me or anyone within 200 grand of my yearly salary, this is nothing but hedge fund government assistance.
    • Xios117, on 03/17/2008, -1/+2Yay for the proliferation of our economy's core "values-" the little man.
  • MikeFallopian, on 03/17/2008, -1/+1Good. Bear deserves to be bought out based on their investment decisions, and the gov't should make sure that the buy-out doesn't cause too much damage elsewhere.
  • rmxz, on 03/17/2008, -1/+2Of course their stock's still comfortably above where it was in 1998.
    I've had plenty of stocks that did worse than this one.
    Why bail them out and not (enron, worldcom, etc)?
    • mavere, on 03/17/2008, -0/+1Because Enron's and Worldcom's collapse wouldn't and didn't cause the collapse of their respective industry.
      There's something scary about the way our financial industry is so intertwined. Especially since our banks provide the money to run so much of the economy.
  • lopla, on 03/17/2008, -2/+8Rumors of BLACK MONDAY spreading like wildfire. Top analysts rumored to be speculating on a dip to 4,000 on the DOW. Luckily I got out of the market two months ago, I knew this was coming. Many people will die tomorrow in suicides when they lose everything. This is no laughing matter and my prayers are with you all.
  • Ricemanstm, on 03/17/2008, -1/+3Well...Ya gotta wonder about doing business with a company with the initials..B.S....
  • samblum, on 03/17/2008, -0/+0This guy will need any advice he can get:
    http://razume.com/resume/view/322
  • RobsaysHello, on 03/19/2008, -0/+1Expect unintended consequences.
  •  

    Login or register to add a comment

    Create a new account or login to join in the conversation on Digg. You'll also be able to Digg stories to help promote things you like.


© Digg Inc. 2008 — Content posted by Digg users is dedicated to the public domain.
DIGG, DIGG IT, DUGG, DIGG THIS, Digg graphics, logos, designs, page headers, button icons, scripts, and other service names are the trademarks of Digg Inc.