Fed staff is on site at Goldman Sachs Group Inc., Morgan Stanley, Lehman Brothers Holdings Inc., Merrill Lynch & Co. and Bear, which has agreed to be sold to J.P. Morgan Chase & Co. Each of the brokerages has disclosed that it has borrowed from the Fed since it temporarily opened its lending facility last month, while Merrill Lynch hasn't said whether it did. A Merrill spokeswoman declined to comment. Per this morning's WSJ. Like driving with your dad in the car. How are they going to make any money?
Any lawyers here? Remember, Overstock has discovery vs. the Prime Brokers. There will be some very interesting trading records there. what really is interesting is Fuld having "proof" which has to be trading records, and they must be his. Bear is only 2 1/2 wks old, so he couldn't get anybody elses. Gasparino will get three or ten new books out of this.
What would really eat me as an employee or investor is the timeline. Tell me if I'm wrong here - - Bear started under pressure that week. Negative news flows accelerated dramatically into midweek. First public pronouncement: Greenberg terms liquidity questions and rumors "Ridiculous" mid morning on Wednesday. Second public pronouncement: Schwartz does the call on Thursday at 12:30 which I tried to listen to carefully. Two very important points were made to me: 1) earnings are going to be accelerated to the following Monday after the close; and 2) he defends POINTED questions from analysts (analyst questions as good as you can get imo) by saying they just dont have the numbers ready and a CLEAR and FULL DEPICTION of Bear's position would be revealed in the Monday EPS release. There was nothing in that call that suggested to me that Bear was not a going concern. So WTF happened between 1;15 on Thursday and Sunday afternoon? Or was Schwartz intentionally misleading his audience? Or was it both?
understand the cartel of outperformance. You take the position, the 'short', then you distort. Now, within the short selling is market manipulation, buying reporters, regulators, (you'll be seeing some stuff about this with Lover Boy), and just being so greedy you would take the entire system to the brink. After the position is on, you just start the rumors and run the customers out. If you're big, and have money there , you pull that. This is basically what Schwartz said. He said something to the point of, 'we put out one fire (rumor), two more popped up." He looked really pained. I feel no pity; they did it to hundreds of companies thru the years. In this business, when they run off the assets, destroy confidence - what does anybody on the Street think when the stock is weak? " the tape doesn't lie." Now, just look at the Senator ask Cox about Naked short selling, and remember Fuld has "proof". It's kinda obvious. He said, in the Meeting, his net capital went from 10bb to 2bb in a day. No one would do business. It truly is a mess, but one the industry brought upon itself. Now, the Feds sit with them like some detention homeroom in a public school. How shameful.
Goldman managed to do what ENRON couldn't - place one of their honchos in government. The rest is history.
======================== Thoughtful points,Fly tiger.. However the ''fire ''was a bit more than a rumor.Mr Dimon of JPM said the house[BSC ] ''was on fire'', so it wasnt just a smoke/rumor job. And sure ,he wanted it on the cheap like anyone qualified would; again not just a rumor /short''distortion''.NY FED head said openiing the FED window to Bear [today, in hearings.] ''not prudent'' Sounds like a logical reason . And since nobody has used the words -insane leverage like LTCM, far be it from me to name it that way.. You are right on what Mr. Schwartz said; & probably BSC undervalued their headquarlers -real estate building, as mr Schwartz said.