Archive for June 6th, 2008Small Business and Self-Employed One-Stop Resource Long Island Business and New York City Business, including NYSE … College of Business & Behavioral Science Dallas Business News | Dallas Morning News | News for Dallas, Texas MyFlorida.com - Taxonomy - Business Financial News, Business News and Market Updates | Reuters.com Freep.com | Detroit Business | Detroit Free Press Chicago business news, headlines from the Chicago Tribune … Filed under: Deals, Management, Competitive strategy, Scandals, Bear Stearns Cos (BSC)
Going, going, gone! No more Bear Stearns. What a shame. It didn’t have to be, but alas — bad management, greed, and too much negativity on Wall Street made it unsustainable when sustainability is the word of the day. It is, or should I say was, one of the foremost investment banks on Wall Street for many decades. JPMorgan Chase (NYSE: JPM) finished it acquisition of Bear Stearns (NYSE: BSC) on May 30, 2008. As a result, Fitch Ratings has upgraded the ratings of BSC and removed them from Rating Watch Positive, where they were originally placed on March 17. As the direct and sole owner of BSC, JPM has assumed the capital structure of BSC. Bear Stearns had been one of the top investment banking, clearing, and brokerage firms in the United States, serving major corporations, institutions, governments, and high net worth individuals. Through several subsidiaries, it provided asset management, lending, and merger and acquisition advisory services. It’s been a leading market-maker for NYSE-listed securities (through Bear Wagner Specialists), as well as for OTC shares, corporate and government bonds, and derivative products. It was these derivative loan instruments that did them in. Bear Stearns, a company that for decades was relied upon to help its customers assess risk, fell short when it came to managing its own. Management wasn’t watching very closely, and if they were, they did not understand what they were seeing. (See Serious Money: The page on Buffett Part V: Company Management.) I also get the feeling that once BSC was wounded by a heavy debt burden, unknown or uncertain future risk, and liquidity issues throughout the financial industry, the vultures began to circle, preying on them until it could sustain itself no more. It’s sad to see this once-venerable company disappear, but others will thrive in its absence. What makes me saddest about the whole affair isn’t the loss of Bear Stearns or my personal loss, but that I see little or no evidence that anyone in government or on Wall Street has learned any lessons from our current financial crises. There is plenty of finger pointing, CEO firings, congressional hearings, press conferences, and the like, but not much more. Perhaps the removal of the worst offenders from their leadership positions is the best we could hope for. Good luck to those that carry on the clean-up. Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I had owned shares of BSC and now own JPM. Let us know in the comments what you remember about Bear Sterns. And be sure to check out other Companies That Have Vanished.
Filed under: Before the bell, Earnings reports, Forecasts, Deals, Market matters, Bank of America (BAC), Countrywide Financial (CFC), Amer Intl Group (AIG), Economic data, Oil, Lehman Br Holdings (LEH), Housing, Federal Reserve
U.S. stocks staged a massive rally Thursday, ending a three-day losing streak as the Dow climbed over 200 points. Better-than-expected initial jobless claims data and strong sales from several retailing giants namely Wal-Mart Stores Inc. (NYSE: WMT) helped boost sentiment. The Dow Jones Industrial Average ended climbing up 213.79 points, or 1.73%, the S&P 500 gained 26.85 points, or 1.95%, and the Nasdaq composite completed 46 points, or 1.87%, higher. At 8:30 a.m. EDT, the government will release the non-farm payroll report for May. Economists anticipate a loss of 60,000 jobs in Might according to Briefing.com. Unemployment rate is expected to increase to 5.1% from 5% the month before. Hourly earnings are expected to show an increase of 0.2%. While the expected numbers show continued deterioration of the labor market, despite wages increasing at a lower rate than inflation so far, some could anticipate a surprise since the ADP report had relatively good numbers. The market will react to the report. Meanwhile, oil prices rose back above $130 a barrel, following the biggest single day price rise ever in dollar terms, a gain of $5.49 Thursday. The spike on Thursday came after ECB president said the bank might raise interest rates, which would of course weaken the U.S. dollar. Meanwhile, home foreclosures soared to a new record. In corporate news, the Federal Reserve has approved Bank of America Corp. (NYSE: BAC)’s $4 billion buy of distressed mortgage lender Countrywide Financial Corp. (NYSE: CFC). The Securities and Exchange Commission is investigating whether American International Group Inc. (NYSE: AIG) overstated the value of credit default swaps linked to subprime mortgages. A criminal investigation could follow, the Wall Street Journal reported. And staying in financials, Lehman Brothers Holdings Inc. (NYSE: LEH) may pre-announce what might be its first quarterly loss since going public in 1994 as early as next week and it may raise as much as $5 billion also by early next week. |
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Stock futures were mixed early Friday as oil prices spiked to levels not seen in a week on fears the dollar would weaken further. Investors are also awaiting May’s payroll numbers.
