March 25, 2008

One day we'll know the truth about the Bear Stearns blowup and shotgun marriage, and how the government forced them to sell to JPMorgan at any price

You'll be amazed when it comes out at the 2009 Senate REIC Investigations what went on behind the scenes.

Paulson and Bush will be gone by then, but what the investigators will find will be that the world financial system came within hours of falling apart, and that the multi-trillion dollar derivatives market almost exploded.

But then again, by the time the investigation starts in 2009, and trillions have been lost, banks have failed, and the taxpayers have paid the bill, maybe Bear's collapse will be just a footnote.

“The rescue was absolutely all about counterparty risk. If Bear went under, everyone’s solvency was going to be thrown into question. There could have been a systematic run on counterparties in general,” said Meredith Whitney, a bank analyst at Oppenheimer. “It was 100 percent related to credit default swaps.”

“It showed that anything important is going to be bailed out one way or the other,” says Kevin Phillips, a former Republican strategist.

17 comments:

Anonymous said...

details coming out

http://tinyurl.com/2uo5yh

WASHINGTON (MarketWatch) -- The Federal Reserve has gone into business with J.P. Morgan Chase & Co. by taking effective ownership of $30 billion of the most toxic waste on Bear Stearns' books.
In the latest groundbreaking move from the central bank, the New York Federal Reserve Bank will manage and dispose of the high-risk securities that helped push Bear Stearns Cos. over the brink and into the arms of J.P. Morgan.

If the securities, valued at $30 billion on March 14, sell for more than $30 billion, the Fed will take the profit. If they sell for less, J.P. Morgan will assume the first $1 billion in losses, with the Fed on the hook for the remaining $29 billion.

Anonymous said...

But members of Congress see right through this fa├žade, Ely said. "They will be all over this thing. There are lots of grandstanding opportunities."
Consumer advocates will argue that the Bush administration cannot limit its assistance to just Bear Stearns.

"In keeping Bear Stearns solvent, the Federal Reserve acted to avert a domino effect it feared could spark a wider financial market meltdown. But if a firm that's partially to blame for this crisis warrants help, then surely so do millions of ordinary families who are struggling to keep their homes," said the Center for Responsible Lending, in a statement on its website.

Afterthought said...

Wiping out the so called wealth in these derivatives would be a good things because they are all total fiction.

The worst thing they did was allow speculators access to the Fed's infinite credit line.

That will go down in history as the worst decision ever.

Boom2Bust.com said...

Anonymous wrote:

"'But if a firm that's partially to blame for this crisis warrants help, then surely so do millions of ordinary families who are struggling to keep their homes,' said the Center for Responsible Lending, in a statement on its website."

Read the same argument the other day in the OCRegister:

"So if the system can arrange cures for Wall Street idiocy, honest folks who just goofed on the mortgage for the roof over their heads deserve their two-buck bailout, too."

http://www.ocregister.com/articles/stearns-bear-fed-2000702-mortgage-subprime

Buzz Saw said...

The masters of the universe can do whatever they want. Nobody gets in their way.

Anonymous said...

The pain will just move somewhere else. The end result must happen one way or another.

Keyser Soze said...

I'm getting a little cranky about this stuff. Okay...the FED had to bail out Bear because they had $13.7 trillion in Credit Default Swaps. There are $500T in total CDS's. Since no one really understands the result of this unwinding, our tax monies must bail them out? If the situation is so dire, then why does the FED continue to allow the banks to write this swaps? I understand that they are used to minimize risk in loans....but why are they then used to blackmail us when things turn ugly?

Ed said...

I thought Democrats in congress were supposed to clean up corruption. You think this will happen when Hillary's top donors are

1. DLA Piper $490,800
2. Goldman Sachs $426,100
3. Morgan Stanley $368,670
4. Citigroup Inc $353,900
5. EMILY's List $283,142
6. Lehman Brothers $254,400
7. JP Morgan $231,220

And the MESSIAH OBAMA's top donors are

1. Goldman Sachs $474,428
2. UBS $298,180
3. JP Morgan $282,387
4. Lehman Brothers $274,147

Oh yeah Hill-a-bama is fighting for the little guy against the big bad mean corporations. Only a complete imbecile would believe that story...hence why Democrats are head over heals for both of them.

Anonymous said...

The system is already broken. It just hasn't fallen down.

All the king's horses, and all the king's men, and all of the money, everywhere, won't be able to put it back together again.

pkk

Anonymous said...

hello morons

stocks up big again today

how's that 2% CD of yours

Bush said...

Just make it pass the election - Bush

Anonymous said...

Just more of that old song-n-dance. Socialism for the rich. Strangulation by the invisible hand for everyone else.

Anonymous said...

"if a firm that's partially to blame for this crisis warrants help, then surely so do millions of ordinary families who are struggling to keep their homes," said the Center for Responsible Lending"

And what happens to the honest citizens left in this country who didn't get a liar loan to get a house they couldn't afford?

Anonymous said...

LIQUIDITY TRAP DEAD AHEAD!

Hoof said...

Anonymous Anonymous said...

"if a firm that's partially to blame for this crisis warrants help, then surely so do millions of ordinary families who are struggling to keep their homes," said the Center for Responsible Lending"

And what happens to the honest citizens left in this country who didn't get a liar loan to get a house they couldn't afford?

March 25, 2008 9:30 PM


I'm guessing an ass rapin'.........

The Bruiser said...

...why does the FED continue to allow the banks to write this swaps? I understand that they are used to minimize risk in loans....but why are they then used to blackmail us when things turn ugly?

Keyser Soze, your answer is right in front of you. Since the Fed now practices a policy of Ready-Fire-Aim with respect to protecting the CDS mythology, the Fed will always backstop entities with huge CDS risk or counterparty risk. The counterparties may not ever be able to pay, but The Gubmint will surely step up with a blank check every time, no questions asked. Ain't free markets wonderful?!?!

GT said...

Ready-Fire-Aim

Priceless!!