The SEC released a statement about Bear Stearns

The Securities and Exchange Commission’s division of trading and markets said that the decision to supply temporary funding to Bear Stearns Cos. (BSC) followed a “significant deterioration” in the bank’s liquidity on Thursday.

SEC officials said in a statement that they had been monitoring Bear Stearns’s financial situation on a daily basis in recent weeks, and had no cause for alarm earlier in the week. Bear’s holding company capital exceeded regulatory standards at the end of February, and information supplied by Bear Stearns to the SEC on Tuesday showed the holding company had a “substantial capital cushion,” according to the SEC. As of that date, the firm had more than $17 billion in cash and unencumbered liquid assets, the SEC said.

“Beginning on that day, however, and increasingly throughout the week, lenders and customers of Bear Stearns began to remove funds from the firm, despite its stable capital position. As a result, Bear Stearns’s excess liquidity rapidly eroded,” the statement says.

On Friday, federal officials announced a deal to provide a 28-day loan to Bear Stearns through Federal Reserve borrowing by JPMorgan Chase & Co. (JPM). The SEC division that oversees U.S. markets said it is continuing to monitor Bear Stearns’s condition and believes its registered broker-dealers “remain in compliance with commission capital rules.”

The SEC reiterated that it is working closely with the Treasury Department, the Federal Reserve and the Federal Reserve Bank of New York to ensure that its regulation contributes to “orderly and liquid markets.

So, there was no liquidity problem with BSC, the rumors destroyed the company ? If so, we have no "liquidity crisis" instead a confidence crisis, or ?

 

A confidence crisis.

But, will it lead to a broader liquidity crisis? That is the fear in the market

 

The confidence crisis led to the liquidity crisis which led to the bailout which leads to the buyout which leads to the buyer having a confidence crisis which leads to a liquidity crisis which leads to a bailout which leads to a buyout which leads to the buyer having a confidence crisis which leads to a liquidity crisis which leads to a bailout which leads to a buyout which leads to the buyer having a confidence crisis which leads to a liquidity crisis which leads to a bailout which leads to a buyout which leads to the buyer having a confidence crisis which leads to a liquidity crisis which leads to a bailout which leads to a buyout which leads to the buyer having a confidence crisis which leads to a liquidity crisis which leads to a bailout which leads to a buyout

 

zachary

 

Liquidate first, then ask questions later.