Bear Stearns Auction?

[blazespinnaker]

Re: Bear Stearns Auction?

systems normall, all .. fu'd.

I have to say, i'd be a bit nervous about my longevity if I was the CEO of JPM or on the board of directors at BSC right about now.

[dewa]

Re: Bear Stearns Auction?

This is part of a missive I received today.Are the stories about what is happening with Bears and the FED and JPM correct?

"The demise of Bear Stearns, which was reported to the public last Sunday evening and Monday, has in turn caused their assets to be sold off in masse this week.

On their book of liquid assets was a rather large, long gold position. It is being sold off in order to raise cash to offset their massive losses. The spot prices have been hammered because of this activity, but it will be short-term in nature. If you're looking to buy physical precious metals to diversify your portfolio at this point, you are being given an unexpected gift to do so. It won't last long.

Another item in Bear Stearns closet was a massive short-position in the ten year treasury. This of course is being unwound this week, which is making the dollar look a bit stronger than it really is. However, don't be confused by this nonsense, the dollar will soon resume its downward trend.

The fact that Bear Stearns was shorting the dollar to such a degree shows that they were not playing along with the the Federal Reserve banking crowd. And they have been severely punished by the powers that be.

What brought Bear Stearns to its knees was their own riverboat gambling mentality that not only jeopardized them, but the financial system as a whole. This story is just the beginning of what will be a long list of companies that meet a similar fate. Will the Fed and the citizens of the United States be able to bail out all the financial sewage that is about to be uncovered?

What the Fed is doing is nothing more than sleight of hand trickery to gain the assets of Bear Stearns. As I have said before, the Federal Reserve is no more "Federal" than Federal Express. It is a private organization owned and controlled by shareholders, the largest of which is J.P. Morgan Chase.

J.P. Morgan Chase, in other words, is the Federal Reserve... so don't be surprised that they end up with the assets while you and I pay for the debts from the whole mess."
http://www.goldworld.com/

[Jim Nickerson]

Re: Bear Stearns Auction?

This is part of a missive I received today.Are the stories about what is happening with Bears and the FED and JPM correct?

"The demise of Bear Stearns, which was reported to the public last Sunday evening and Monday, has in turn caused their assets to be sold off in masse this week.

On their book of liquid assets was a rather large, long gold position. It is being sold off in order to raise cash to offset their massive losses. The spot prices have been hammered because of this activity, but it will be short-term in nature. If you're looking to buy physical precious metals to diversify your portfolio at this point, you are being given an unexpected gift to do so. It won't last long.

Another item in Bear Stearns closet was a massive short-position in the ten year treasury. This of course is being unwound this week, which is making the dollar look a bit stronger than it really is. However, don't be confused by this nonsense, the dollar will soon resume its downward trend.

The fact that Bear Stearns was shorting the dollar to such a degree shows that they were not playing along with the the Federal Reserve banking crowd. And they have been severely punished by the powers that be.

What brought Bear Stearns to its knees was their own riverboat gambling mentality that not only jeopardized them, but the financial system as a whole. This story is just the beginning of what will be a long list of companies that meet a similar fate. Will the Fed and the citizens of the United States be able to bail out all the financial sewage that is about to be uncovered?

What the Fed is doing is nothing more than sleight of hand trickery to gain the assets of Bear Stearns. As I have said before, the Federal Reserve is no more "Federal" than Federal Express. It is a private organization owned and controlled by shareholders, the largest of which is J.P. Morgan Chase.

J.P. Morgan Chase, in other words, is the Federal Reserve... so don't be surprised that they end up with the assets while you and I pay for the debts from the whole mess."
http://www.goldworld.com/

I've yet to see what you posted appear with any serious documentation of its veracity. I've not spent a second searching to see if I could find substantiation of its correctness.

[GRG55]

Re: Bear Stearns Auction?

Well, well, whowuddathunkit...the Fed in the pawnbroker business. The Bloomberg article below explains a lot, especially in the context of Bernanke's earlier comments:

In his infamous 21st November, 2002 "helicopter speech", Bernanke talks about the Fed's [legally] restricted ability to buy private securities directly.

In the accompanying footnote [12] it states "...It [the Fed] is also permitted to make IPC (individual, partnership and corporation) loans directly to the private sector, but only under stringent criteria. This latter power has not been used since the Great Depression but could be invoked in an emergency deemed sufficiently serious by the Board of Governors."

What is interesting is that throughout this part of his speech Bernanke is dealing with remedies after the Fed has already hit the zero bound, and is trying to recover from, not prevent, deflation. Now the last time I looked the Fed still had 225 bips of rate cutting room left, and most commentators are pointing to inflation concerns.

So what is really going on? And why? What does the Fed know that they aren't telling?

Fed Expands Role by Aiding JPMorgan's Purchase of Bear Stearns

By Scott Lanman and Craig Torres
March 25 (Bloomberg) -- The Federal Reserve further expanded its role as a backstop to Wall Street dealers, setting up a new company to manage and sell $30 billion of Bear Stearns Cos. assets.

In disclosing terms of a financing arrangement to speed JPMorgan Chase & Co.'s purchase of Bear Stearns, the Fed said yesterday it hired BlackRock Inc. to oversee and sell the assets, which will be placed in a new company created by the central bank.

Fed Chairman Ben S. Bernanke, trying to restore confidence to financial markets by averting a collapse of Bear Stearns, is pushing the central bank into new territory. Yesterday's announcement shows the Fed acting like a bank liquidator -- a role traditionally performed by the Federal Deposit Insurance Corp. -- for Bear Stearns, a firm whose main regulator is the Securities and Exchange Commission.

``Bernanke has taken the bit in his teeth,'' said Tom Schlesinger, executive director of the Financial Markets Center in Howardsville, Virginia. ``I can think of nothing in recent or distant memory that remotely resembles what the Fed is doing here, certainly within the context of the central bank's operations.''

The Fed last week agreed to help JPMorgan acquire Bear Stearns after a run on Bear, once the second-biggest underwriter of U.S. mortgage bonds. In an effort to shore up Wall Street's other firms, it also agreed to become lender of last resort to all 20 primary dealers in Treasury notes.

BlackRock Selected
The Fed said March 16 it would provide financing to JPMorgan for $30 billion of Bear Stearns assets. Yesterday, it released terms of the funding, including some details on the company managed by BlackRock. The Fed said JPMorgan will shoulder the first $1 billion of any losses, disclosed that the loan will be for 10 years and carry the 2.5 percent interest rate charged to commercial banks at the discount window.

Fed officials defended their role in the Bear Stearns rescue as necessary to prevent a broader financial panic. Credit markets have been roiled by concerns that borrowers won't repay debt, and funding has dwindled for securities firms, hedge funds, and mortgage banks.

Still, Bernanke and New York Fed President Timothy Geithner may have overstepped and altered the role of the government in financial markets, said Joe Mason, associate professor of finance at Drexel University in Philadelphia.

`Far Outside'
``The Fed is so far outside the traditional bounds,'' said Mason, a former economist at the Office of the Comptroller of the Currency, one of five federal bank regulators. ``It isn't innovative, it is taking a step back in time to a system of direct credit'' where the government decides ``who gets funding and who doesn't,'' he said.

Under the terms of the deal, the Fed will loan $29 billion, and JPMorgan will loan $1 billion, to a new company based in the U.S. state of Delaware.

The new company will then send $30 billion to JPMorgan in exchange for some Bear Stearns assets valued at that amount as of March 14. BlackRock has been hired by the central bank to manage and liquidate the assets to repay the loans, interest, and management expenses of the company. JPMorgan will be first to absorb losses on the assets, to $1 billion, if there are any.

``This sounds like a purchase of a portion of Bear Stearns's portfolio,'' Vincent Reinhart, a former head of Fed's Division of Monetary Affairs, and now a scholar at the American Enterprise Institute in Washington, said in a Bloomberg Television interview. ``The Federal Reserve Bank of New York seems to have an equity interest. It's not your father's kind of loan.''

RTC Similarities
The structure resembles that of the Resolution Trust Corp., the agency created in 1989 to dispose of the assets of insolvent savings and loans banks, said Schlesinger of the Financial Markets Center.

From 1986 through 1995, 1,043 savings banks with over $500 billion in assets failed, costing taxpayers $75.6 billion, according to an FDIC analysis.

``What they're doing is setting up a mini-RTC within their own domain,'' said Schlesinger. ``The Fed is not only breaking new ground with respect to policy initiatives, but breaking new ground functionally in taking on a bad-asset resolution capacity without any authority from Congress to do so, without any oversight.''

Bernanke testifies to the Joint Economic Committee of Congress on April 2. Senator Charles Grassley, an Iowa Republican member of the chamber's finance committee, said last week he wants details of the Fed's involvement in the rescue of Bear Stearns.

``I want to understand what the downside risk for the taxpayer is and any upside potential,'' Grassley said in a statement on March 20.

[dewa]

Re: Bear Stearns Auction?

I've yet to see what you posted appear with any serious documentation of its veracity. I've not spent a second searching to see if I could find substantiation of its correctness.

At an educated guess,I would say that the answers to my questions is ...No need to reply if you didn't have anything to contribute.Not being smart or sarcastic,just making a casual comment.

[metalman]

Re: Bear Stearns Auction?

TAKE BS private, take them all private, that will be the next move, you watch! No disclosure problems with a PRIVATE Company. Just crater the price, then by it cheap. (It's all cheap anyway when you can print money, who cares what ******* price you pay, if you don't have to pay for the money). I hear counterfitting can be quite lucrative, BTW.

of course that's what they'll do. same with the gse's. take them all private, pump printed money into them. all 'legal" in a legalized gov't fraud kind of way.

[jk]

Re: Bear Stearns Auction?

the fed is now the 29/30 proud owner of its very own siv. i suggest reading john hussman's latest piece at hussmanfunds.com . he points out that the fed has overstepped its legal authority, and that in one fashion or another the public is on the hook for $29billion, while the bondholders have been made whole, and the stockholders allowed some value.

the real winners on this transaction are the bsc bondholders. those bonds were impaired not long ago, and are now money-good. anyone come across info on who those bondholders are?

[blazespinnaker]

Re: Bear Stearns Auction?

the fed is now the 29/30 proud owner of its very own siv. i suggest reading john hussman's latest piece at hussmanfunds.com . he points out that the fed has overstepped its legal authority, and that in one fashion or another the public is on the hook for $29billion, while the bondholders have been made whole, and the stockholders allowed some value.

the real winners on this transaction are the bsc bondholders. those bonds were impaired not long ago, and are now money-good. anyone come across info on who those bondholders are?

I think it's the counterparties to the trillions of derivatives that the fed was concerned about...

[GRG55]

Re: Bear Stearns Auction?

I think it's the counterparties to the trillions of derivatives that the fed was concerned about...

That means by saving them, thus preventing the alternative outcome, we are all "winners". At least that's what the official line is, correct?

[blazespinnaker]

Re: Bear Stearns Auction?

That means by saving them, thus preventing the alternative outcome, we are all "winners". At least that's what the official line is, correct?

I think we really need to get over this "moral hazard" issue. The time to be wringing our hands is when things settle down, not when there is an immediate risk of total financial meltdown.

The key, really, is people should be shouting for record keeping right now. When we go back to look at what all went wrong, let's make sure everything is down on paper.

I think the Fed should be forced to tape record all their conversations right now.

[WDCRob]

Re: Bear Stearns Auction?

Am I the only person here that finds quoted articles where every single word is italicized, bolded, underlined, font increased, font colored or otherwise dolled up completely impossible to read?

Maybe I need to take up Meth or something, but after a sentence or two I just move on.