Astronomers spot unusual luminous spots on Jupiter. The last
thing to get so lit up you could see it from 1MM miles away was
Brian Benson... at tonights party. We saw a huge seller of aged
inventory today. It turned out to be the manager of the Bear
Stearns Company Store. He sold everthing in the store for $2 and
just when the sale ended this 20 yr employee surprised the crowd
and pulled off his wig. Thats the only hair raising surprise
that this floor could handle right now. We have stopped trading
and have started to see JP Chase managers on the floor. Jamie
Diamond will address all the SMD's at 5. JP won't have spots for
all of us so if you know of any job...big or small...please make
me aware of it and i will put you in touch with them.

James Dimon tramped through the rain on Wednesday evening and strode into the headquarters of Bear Stearns, the embattled investment bank he hopes to buy for a mere $2 a share.

More than 400 Bear executives — seething, fearful and to their dismay, far poorer than they were a week ago — were waiting for him.

Only days after his controversial deal for the beleaguered investment bank stunned Wall Street, Mr. Dimon, the chairman and chief executive of JPMorgan Chase, made an appearance at Bear Stearns, hoping to win over executives who have vowed to fight his offer. Mr. Dimon left many of them as angry and resentful as he found them.

“I don’t think Bear did anything to deserve this,” Mr. Dimon said. “Our hearts go out to you.”

“No one on Wall Street could have anticipated this,” he continued. “I feel terrible sometimes when people think we took advantage. I don’t think we could possibly know what you all are feeling, but I hope that you give JPMorgan a chance.”

Over the next 45 minutes, Mr. Dimon made it clear that he hoped to retain the best employees at Bear but also made it plain that many of Bear’s 14,000 employees will lose their jobs as a result of the deal, struck at the urging of the Federal Reserve and the Treasury Department. JPMorgan executives plan to cull one Bear employee after another, while keeping the best performers, as they move to integrate the two firms.....

Hours from a market meltdown, as U.S. regulators pressed him for help in rescuing Bear Stearns Cos., Jamie Dimon said no.

The JPMorgan Chase & Co. chief executive officer was concerned that liabilities on the firm's books would bring along too much risk, Dimon and others involved in the bailout told Congress yesterday. Dimon's refusal prompted the Federal Reserve to step in with a loan, announced minutes before Asian markets opened that Sunday, March 16.

The testimony provided the most extensive account yet by participants in the largest U.S. rescue of a securities firm. Dimon, New York Federal Reserve President Timothy Geithner and Fed Chairman Ben Bernanke defended the bailout while some lawmakers said it only rewarded risky market bets. The officials compared the turmoil they feared that weekend to the Panic of 1907 and the Great Depression-era run on banks.....

With congressional hearings filling the airwaves, Federal Reserve officials defending unprecedented moves, and a hail of new acronyms battering our heads, something important is clearly going on in the U.S. financial system. Trouble is, most people have no idea what it is.

All one really needs to understand the Bear Stearns Cos. mess is two words: ``Mary Poppins.''

Last September, historian Niall Ferguson wrote a prescient piece in the Telegraph of London that alluded to the movie classic and suggested that it wouldn't take much to cause a liquidity disaster today.

In the film, recall, young Michael starts a run on a bank when he demands that the bank president, Mr. Dawes Sr., return his tuppence. Screaming ``Give it back, Gimme back my money!'' Michael incites a panic, and depositors rush to get their money out, as a banker yells, ``stop all payments.''

Almost nothing at all happens, but a bank run occurs, nonetheless.

As Ferguson foresaw, Bear Stearns Chief Executive Officer Alan Schwartz last week made the case that something similar happened to his company, with the exception being that the problem was started by individuals with malicious intent.

``It looked like more than just fear -- it looked like people wanted to induce a panic,'' he said.

Christopher Cox, chairman of the Securities and Exchange Commission, lent some credence to the accusation, when he told Congress the SEC is investigating the matter.....

A Wall Street short-seller on Thursday was charged by the Securities and Exchange Commission with spreading false rumours in a case that suggests regulators are taking a fresh look at behaviour that many companies say is now rampant.

The case, which hinges on rumours about a Blackstone takeover deal, comes as the SEC faces growing pressure to investigate allegations that false rumours about Bear Stearns may have had contributed to its collapse last month.

EDITOR’S CHOICE
Gabelli in $16m payment to SEC - Apr-25

SEC to report on credit rating agencies - Apr-23

NY investigates auction securities market - Apr-18

Headstart rejects SEC’s ‘market timing’ claim - Apr-12

SEC to propose rules on ratings conflicts - Apr-10

SEC sues Headstart over alleged fund fraud - Apr-11

After Bear’s liquidity evaporated, similar rumours hit Lehman Brothers, leading to a sharp, but temporary, drop in its shares. At the SEC’s request, Lehman and other banks sent information to the commission about trading in their securities in the days surrounding Bear’s collapse.

Rumour-mongering cases are rare and notoriously difficult to prove because they require investigators to track down the initial source of the rumour and produce documentary evidence.

In spite of that, Chris Cox, SEC chairman, said the commission would take firm action against people who spread bogus rumours.

“The message of this case is simple and direct. The commission will vigorously investigate and prosecute those who manipulate markets with this witch’s brew of damaging rumours and short sales,” he said.....

On Monday, March 10, Wall Street was tense, as it had been for months. The mortgage market had crashed; major companies like Citigroup and Merrill Lynch had written off billions of dollars in bad loans. In what the economists called a “credit crisis,” the big banks were so spooked they had all but stopped lending money, a trend which, if it continued, would spell disaster on 21st-century Wall Street, where trading firms routinely borrow as much as 50 times the cash in their accounts to trade complex financial instruments such as derivatives.

Still, as he drove in from his Connecticut home to the glass-sheathed Midtown Manhattan headquarters of Bear Stearns, Sam Molinaro wasn’t expecting trouble. Molinaro, 50, Bear’s popular chief financial officer, thought he could spot the first rays of daylight at the end of nine solid months of nonstop crisis. The nation’s fifth-largest investment bank, known for its notoriously freewheeling—some would say maverick—culture, Bear had pledged to fork over more than $3 billion the previous summer to bail out one of its two hedge funds that had bet heavily on subprime loans. At the time, rumors flew it would go bankrupt. Bear’s swashbuckling C.E.O., 74-year-old Jimmy Cayne, pilloried as a detached figure who played bridge and rounds of golf while his firm was in crisis, had been ousted in January. His replacement, an easygoing 58-year-old investment banker named Alan Schwartz, was down at the Breakers resort in Palm Beach that morning, rubbing elbows with News Corp.’s Rupert Murdoch and Viacom’s Sumner Redstone at Bear’s annual media conference.

It was an uneventful morning—at first. Molinaro sat in his sixth-floor corner office, overlooking Madison Avenue, catching up on paperwork after a week-long trip visiting European investors. Then, around 11, something happened. Exactly what, no one knows to this day. But Bear’s stock began to fall. It was then, questioning his trading desks downstairs, that Molinaro first heard the rumor: Bear was having liquidity troubles, Wall Street’s way of saying the firm was running out of money. Molinaro made a face. This was crazy. There was no liquidity problem. Bear had about $18 billion in cash reserves.

Yet the whiff of gossip Molinaro heard that morning was the first tiny ripple in what within hours would grow into a tidal wave of rumor and speculation that would crash down upon Bear Stearns and, in the span of one fateful week, destroy a firm that had thrived on Wall Street since its founding, in 1923.

The fall of Bear Stearns wasn’t just another financial collapse. There has never been anything on Wall Street to compare to it: a “run” on a major investment bank, caused in large part not by a criminal indictment or some mammoth quarterly loss but by rumor and innuendo that, as best one can tell, had little basis in fact. Bear had endured more than its share of self-inflicted wounds in the previous year, but there was no reason it had to die that week in March.....