William Eng
March 23rd, 2008, 09:12 AM
The past week has been historical in the annals of financial mismanagement, and attempts at management.
Bear Stearns collapse, hopefully, will not be pandemic. Bear Stearns survived 85 years of Wall Street volatility only to "fail" quietly over a weekend.
It employed 14,000 specalized personnel at it's peak. Rumors are circulating that half of the staff will be gone by the end of the next calendar year. In the financial world, dismissals are immediate, and usually in the presence of an armed guard to assure the dismissed employee won't be able to do anything to "diss" the company.
A little over a year ago the price of it's publicly traded shares was $170. This past weekend, somebody threw a number out, $2, at it's sales price to J.P. Morgan.
Both the attitude and perspective of the company bought, and the company that did the buying, is "Arrogance Penultimate."
When I first read it was J.P. Morgan that bought Bear Stears, I uttered to my wife, "That Jamie Dimon who runs J.P. Morgan, is a jerk. He use to work for the bank I use to work for." Dimon proved true to form when he paid a parimutuel wage at the race track for a share of Bear Stearns: $2. I guess Dimon really thought he was making a longshot bet that Bear Stearns would be worth something.
In a quote from the Wall Street Journal (March 21, 2008):
"J.P. Morgan’s deal for Bear Stearns has several unusual features that make the deal particularly favorable to J.P. Morgan and comes at the expense of the shareholders of Bear Stearns, who are losing billions on the $2.40 a share offer. It’s nearly impossible for any rival bidder to break it up, J.P. Morgan already has management oversight of Bear, J.P. Morgan can buy the building even if Bear’s board rejects the deal, and J.P. Morgan can buy up to 20% of Bear’s shares if any other buyer does the same. And the prospects for a legal showdown in Delaware court don’t look so auspicious, one expert told (http://blogs.wsj.com/law/2008/03/19/how-would-shareholders-of-bear-fare-in-delaware/?mod=WSJBlog&mod=WSJBlog)our brother Law Blog."
That Dimon, what a deal-maker!
So, now that we know that Dimon is a weasel, can we feel sympathy for the employees and stockholders of the "former" Bear Stearns?
I didn't have to think too hard to recall something about Bear Stearns. They're jerks too.
Several years ago, my wife was at a charity fundraiser. Ray Spaeth, the president of Lakeside Bank and personal friend, introduced my wife to a recently transplanted Hong Kong resident. This Hong Kong resident was brought over by his employing firm, Bear Stearns, for training and eventually to return to Hong Kong to run one of the larger divisions. Ray suggested that my wife visit the Bear Stearns transplant to see about opportunities in China.
My wife came back from the meeting with a very bad experience about Bear Stearns. They kept her waiting for over half an hour, during the meeting she was belittled needlessly, she was mildly rebuked for the manner in which she was conducting her business, etc. So, it should come as no surprise when she found Bear Stearns went belly-up that she shed no tears.
Humility is something Wall Street needs to learn.
Bear Stearns collapse, hopefully, will not be pandemic. Bear Stearns survived 85 years of Wall Street volatility only to "fail" quietly over a weekend.
It employed 14,000 specalized personnel at it's peak. Rumors are circulating that half of the staff will be gone by the end of the next calendar year. In the financial world, dismissals are immediate, and usually in the presence of an armed guard to assure the dismissed employee won't be able to do anything to "diss" the company.
A little over a year ago the price of it's publicly traded shares was $170. This past weekend, somebody threw a number out, $2, at it's sales price to J.P. Morgan.
Both the attitude and perspective of the company bought, and the company that did the buying, is "Arrogance Penultimate."
When I first read it was J.P. Morgan that bought Bear Stears, I uttered to my wife, "That Jamie Dimon who runs J.P. Morgan, is a jerk. He use to work for the bank I use to work for." Dimon proved true to form when he paid a parimutuel wage at the race track for a share of Bear Stearns: $2. I guess Dimon really thought he was making a longshot bet that Bear Stearns would be worth something.
In a quote from the Wall Street Journal (March 21, 2008):
"J.P. Morgan’s deal for Bear Stearns has several unusual features that make the deal particularly favorable to J.P. Morgan and comes at the expense of the shareholders of Bear Stearns, who are losing billions on the $2.40 a share offer. It’s nearly impossible for any rival bidder to break it up, J.P. Morgan already has management oversight of Bear, J.P. Morgan can buy the building even if Bear’s board rejects the deal, and J.P. Morgan can buy up to 20% of Bear’s shares if any other buyer does the same. And the prospects for a legal showdown in Delaware court don’t look so auspicious, one expert told (http://blogs.wsj.com/law/2008/03/19/how-would-shareholders-of-bear-fare-in-delaware/?mod=WSJBlog&mod=WSJBlog)our brother Law Blog."
That Dimon, what a deal-maker!
So, now that we know that Dimon is a weasel, can we feel sympathy for the employees and stockholders of the "former" Bear Stearns?
I didn't have to think too hard to recall something about Bear Stearns. They're jerks too.
Several years ago, my wife was at a charity fundraiser. Ray Spaeth, the president of Lakeside Bank and personal friend, introduced my wife to a recently transplanted Hong Kong resident. This Hong Kong resident was brought over by his employing firm, Bear Stearns, for training and eventually to return to Hong Kong to run one of the larger divisions. Ray suggested that my wife visit the Bear Stearns transplant to see about opportunities in China.
My wife came back from the meeting with a very bad experience about Bear Stearns. They kept her waiting for over half an hour, during the meeting she was belittled needlessly, she was mildly rebuked for the manner in which she was conducting her business, etc. So, it should come as no surprise when she found Bear Stearns went belly-up that she shed no tears.
Humility is something Wall Street needs to learn.