Larry Ribstein asks what the hell good Sarbanes-Oxley is doing, if Bear can fail like this.
Felix Salmon offers a possible reason why Bear's current share price is so much higher than JPM's offer of $2 share: the bondholders are buying shares so they can vote "yes" on the deal.
David Leonhardt explains the whole thing.
Marc Ambinder speculates on the political fallout from all of this.
The Wall Street Journal says that a showdown is brewing between Bear Stearns shareholders and JPM.
Stock futures and European markets are rethinking yesterday's gains.
as has been previously pointed out, it is, quite, Ironic that you, Mistress of EMH, have become a 'tape-watcher'..
Or, is it, that you really know that the Financial Economy Is a Confidence Game?
Tell us, again, the value of FedRes Notes, would you?
No wonder you link to the likes of Nicole Gelinas...
Gee whiz, without even following the links -
1) Sarbox has nothing to do with it. Banks and securities firms can't survive without confidence. Also, Sarbox is silent on the investment valuation issues that make Bear Stearns short-term insolvent.
2) How come it doesn't occur to the press that yesterday's rally might involve some short-covering? Especially since big investors are not making new securities loans? Do you suppose anyone was short financials over the last year or two? Can anyone say "short squeeze", or at least cover? Who cares if Bear's price is above offer if you were short at $80. Your leverage is more expensive and there's only a few bucks more to go. Move on, as they say.
Most of the coverage of all of this misses the central point which is simply the effects of leveraging (through last spring) and de-leveraging (continuing). This is also the angle regulations need to take - we used to regulate leverage and now we've invented all sorts of forms outside of regulatory scope. Sarbox shmarbox, as usual congress treated a healed wound.
I have to get back to my desk and stick paper clips into my fingers.
Yeah, I too thought the rally was false. Maybe some position trading. We've seen these false rallies before after the Fed cuts rates. Then what? What happens when all the gains from this week are eroded by next week? More cuts? I can tell you where this is going.
Stupid question: If B/S shares are trading so far above their upcoming buyout price, can't someone do something nasty to derail the takeover, like a well-placed tender offer? Would it require special intervention to stop such a tender?
Non-stupid question: for every dollar (valued at par for purposes of argument) of B/S bonds that I hold, how much can I rationally justify spending on shares to favor a buyout? All of them?
$58 billion of parent (no JPM guaranty) notes and bonds outstanding. $12B book equity, $28B of level III assets and over $64B of level II.
The Fed put $30B into the deal to make it work. Let's assume that hasty math is right - it means the bonds are worth $0.50 in liquidation. Half the company costs $500 million or so. $3-4B of bonds might justify it, depending on your confidence in the alternative bid. Personally, I think those concocting some other bid are high, unless they can attract one of a handful of global institutions, all of whom, I'm sure, are anxious to piss of the Fed. It was rumoured Cayne smoked occasionally,so who knows.
Sarbanes Oxley does quite a bit to drive up audit fees for public companies, and keeps auditors like myself employed and handsomely rewarded. What's the problem here?