Bear Stearns to Get Backing From J.P. Morgan, N.Y. Fed – WSJ.com
Firm’s Shares Sink Amid Liquidity Fears
By KEVIN KINGSBURY, ANDREW DOWELL and SERENA NG
March 14, 2008 1:22 p.m.

NEW YORK — In a dramatic move Friday, JPMorgan Chase Co. and the Federal Reserve Bank of New York stepped in with emergency funds to keep beleaguered investment bank Bear Stearns Cos. afloat.

The move, during a week of worry about whether Bear could continue to meet its obligations, took the credit crisis to a new, more serious stage and was a reminder of how quickly an erosion of confidence can undermine even leading financial institutions.

The involvement of the Fed — coordinating with the Treasury Department and the Securities and Exchange Commission — made clear authorities were concerned about the risks to the broader financial system. Bear is the smallest of Wall Street’s big five investment banks, but it is a significant player in markets for debt, particularly for securities backed by mortgages.

My reaction?

It’s just a start, and I hope to flesh it out further as the day goes on.

To the tune of “The Bare Necessities” from Disney’s The Jungle Book:

Look for the Bear Stearns equity,
The simple Bear liquidity,
I’m talking ’bout debt instruments and cash.
I mean the bare necessities,
Like J.P. Morgan’s sympathy,
‘Cause the Fed ain’t always gonna save your ass.

Whenever they go long, whenever they short,
The hedgies are wond’ring if they should abort.
Investors are running on the bank,
To make some money before Bear tanks.
When you see all the traders retreat,
It’s time to examine the balance sheet,
Then maybe sell some more.

The Bear’s liquidity and strife will affect you,
They’ll affect you.

Look for the Bear Stearns equity,
The simple Bear liquidity,
I’m talking ’bout debt instruments and cash.
I mean the bare necessities,
That’s why Bear Stearns can’t rest at ease
‘Cause the Fed ain’t always gonna save your ass.

Copyright © 2008, Steven L. Sheffield. All Rights Reserved.