Bear Stearns: what is going on?

To the OP - I have no clue - but seriously, as a SA with Bear, should I start contacting places I interviewed with previously?

At the very least Bear is goign to face a long recovery. I think JPMC is relatively nice, but i still don't want to see what kind of conditions they put on that financing. If Bear Stearns survives, its gonna be third class for a while.

Buy shares? Tough call. Depends on whether you think shares are pricing in high probability of complete failure or not. If they are then i'd buy (if you think it'll make it). Personally though, wouldn't touch it with a pole.

Bear was insolvent a few hours ago.
Fed put pressure on JPMChase to bail BS out.
28 day reprive.
Most likely JPMC will buyout BS.

This is serious folks.
Look at all the financials.
Look at the friggin dollar.

History in the making.

Be glad you are young.

I don't think any one has a good grasp on the intrinsic value of Bear's stock at the moment.

Long or short, I'd avoid taking any positions on the equity right now.

People still respect the franchise and it looks like the Fed is willing to try maintain liquidity and avoid systemic collapse. But ultimately, Bear's business model is broken and I'm not really seeing any light at the end of the tunnel

If you find out what incoming SAs should be doing, let me know. I'm in the same (sinking) boat as you....

The Fed needs to stop bailing out everyone. This is capitalism - winners come out on top and the losers go out of business.

The bail out plans are similar to the monetary policy prior to the depression.
It didn't work then.

i wouldn't want to be associated with bear at any level at this time. traders are being told not to deal with the bank. if you have ft/sa offers from bear, i would begin to make plans for the worst. it's really sad to see bear go down as it's a great firm with a unique culture. if jpm does end up buying bear, i'm not sure what good that would do for anyone...at least half of bear's employees would have to be fired because of redundancies. for bear, this is an absolutely shitty position to be in.

I'd say this sounds like a late 90's Lehman scenario, but things actually seem far more dire.

LTCM comes to mind.

and it is not just bear.

agree with the many posters above. i will now remove my foot from my mouth after my post 3 days ago stating Bear wouldnt go under. seems like the most likely scenario is that bear will be bought

I wouldn't do anything, long or short, right now.

For the SAs working there, I'm not even sure what to say. I don't think there's anything you can do currently beyond wait to see how it plays out... contacting other banks right now would probably not be a good move.

But I would start thinking about other options for the summer at the very least.

http://www.mergersandinquisitions.com/
Mergers & Inquisitions

What should FT starts in '08 do at the moment? If they were to be bought out it would happen after the 28 days right?

The Federal Reserve of NY is granting Morgan the funds it needs to bail out Bear Stearns, so here is America's Northern Rock...

Doesn't this suck for FT hires no matter what happens to Bear? If they survive, then the reputation will go to shit and there will likely be NO deal flow or confidence. If they go under, then we will be let go? Very sad time to part of Bear

im wondering the same, pogobanker...what exactly will happen to FT bear hires? if jpm or whoever else takes bear over, i doubt they will honor all the offers. they might shut some offices down, best case scenario move some people to their other offices.

Best (ideal) case scenario is that JPM buys Bear and then all the FT hires get shipped to JPM, but that's almost impossible since Bear's IBD isn't what Bear is known for, and the markets are doing so poorly, few banks would look to expand and grow in such a precarious economy. Not to mention, FT hires have little to no experience in banking, so why the heck would they hire them, when they have no deal experience.

Hopefully, we get 60K severance or something.

if bear goes bankrupt, we are all screwed and i can see other banks going down too. but it won't happen, as i think a buyout will occur and the fed won't let the liquidity crisis get out of hand.

but yes, no matter what, it is not a good time to work at bear.

bought out = GG (good game) for Bear Stearns FT hires

I don't see how Bear could possibly weather the storm, since the credit crisis and housing slump hasn't bottomed out yet.

What would you do?!

pogobanker...you are absolutely wrong about buyout being a good thing for ft hires (or any bsc employee for that matter). if jpm buys bear, i assume more than half of bear's employees would be fired due to redundancies. and with the street looking to downsize like never before, it's going to be especially bad for bear. whatever happens, bear loses.

can some u guys explain why bear stearns is in a liquidity crisis? and why other firms can also go thru this crisis?

GG = good game

GG means bad! It's a term used for gamers when they lose. People who lose say GG to the victors as a courtesy. GG = OWNED.

pogobanker, sorry if i misunderstood..."good game" just sounds like a positive term. it seems more appropriate to say GO as in "game over" for bear.

That's good too

Game over!

slik vik, it's all about cash. spooked out clients withdrew funds from bear at a lethal rate, leaving bear with very little short term liquidity. this could happen to other banks...the market seems to suggest that lehman is next, although im not sure what the chances are.

http://www.marketwatch.com/news/story/bear-stearns-goes-life-support/sto...

Who do you think would buy them?

BofA?
Wachovia?
JP Morgan?

hopefully not bofa or wachovia.

Why not those 2 banks?

They both want to be bigger players in banking (or did at one time at least)

Wachovia Stearns doesn't sound too bad

or Bank of Bear

Bear of America? how fitting...

BofA is pulling out of IBD with the urgency of a dude about to bust his load. Don't really think they would be interested in buying out BSC.

If it's anyone, I would say a foreign bank. Maybe HSBC? I know they want to focus on Europe/Asia, but they have made some big IBD hires in the US recently, which points toward expansion.

I couldn't even imagine the culture clash that would result from a foreign bank trying to acquire Bear Stearns. Watching their fratty, meathead, pro-America culture permeate throughout a foreign bank would be hilarious (I know its a rash overgeneralization, but it still cracks me up thinking about it).

What makes you think lehman might be next? What about Merrill? I don't really have any inkling about why either of these should suffer btw, just curious.

If you're a summer associate going to Bear, already signed and everything, what's your best hope/course of action? has this happened to other s before?

dazedmonk...as i said, the market suggested that lehman could be next. take a look at the stock performance of all the major banks today. there was much more pressure on leh because investors in general view leh as the closest thing to bsc....it's the next smallest us bb after bsc, has a similar biz model, and has experienced something similar in the 90s. i dont necessarily agree with all this but that's what the market implied today.

Can anyone compare Bear's current situation with Salomon Brothers before its merger with Citi?

Thanks.

im assuming that i shouldnt accept bear SA... even though my only other option would be corporate finance (not another wall street internship).

any thoughts on whether to accept or deny the offer? right now im leaning towards rejecting it..

"Lehman’s balance sheet is currently levered 40 times, with four times its capital in Liar Level (more formally, Level III) alleged assets, much of which (ahem) bear more than a passing resemblance to the garbage currently in the process of taking down 32-times levered Carlyle Capital."

from Naked Shorts

Too bad none of us are old enough to remember when Drexel went under. Would be interesting to compare the parallels. Of course the FT and SA classes were likely entering kindergarten or 1st grade when that happened.

http://en.wikipedia.org/wiki/Drexel_Burnham_Lambert

i shorted some at the close. sadly shorted fannie at the open instead of bear or morgan.

to the guy a couple posts above me who says he wouldnt accept a summer position...are you retarded?

you think your reputation will be besmirched? lol. just start looking for other things, and if they're miraculously still in business this summer be glad

im not retarded, i just dont think i should accept because i dont have faith in bear anymore, and i think that even if it is around they will have a HUGELY damaged reputation. it would not affect my reputation obviously, but it makes the internship look less desirable and valuable on my resume. who knows if there would be things to do this summer even if they are still around.

i think i would be better off with an internship at GE, a very stable company with a great reputation.

i still havent made the decision yet, margincalling (or anyone else): please let me know if you have any advice?

depends really on what division you have been placed with Bear this summer?

what about Bear Prime Brokerage? I am just afraid by the time summer rolls around that unit will not even exist anymore.

studentbanker: i have been placed with Bear Fixed Income

i've heard that clearing/primebrokerage is the only valuable unit at bsc right now. since a deal must be done quickly (i assume they're cooking something up at this time) jpm might buy the company entirely, keep the prime brokerage and sell off the rest. the problem is, the rest is probably worth close to nothing.

well if jpm buys their pb unit than I won't have a job there...i would just be an intern and im sure there are a lot of redundancies within pb and a lot of people will get fired.

right now, nobody knows what's going to happen to Bear. the Fed effectively gave them a month to conduct an orderly liquidation. whether they sell the entire business in one shot or sell off pieces or don't sell at all (and file chap 11) is anyone's guess right now. i'm sure they are pursuing all avenues as we speak. anyone with an offer or who has secured a position with Bear has every right to be anxious. I think that if you have other offers, you should consider taking them or at least try to hold off on making a decision and seeing what happens. If you've already accepted an offer, you can try interviewing elsewhere but it is going to be tough given the market. The best you can do is wait and see and hope for the best.

When I can also say is that regardless of who may buy Bear (assuming someone picks it up in its entirety), its impossible to know right now what jobs would stay and what jobs would go. Yes, JPM would likely eliminate more ibanking jobs than Wachovia but all anyone can do is wait and see. I wasn't around when Salomon or Drexel crashed and burned but I was around for some of the big bank mergers e.g. DLJ/CSFB. I know for a fact that it took many months after that deal was announced for management to figure out headcount and overlap issues. As tough as it is right now, all most of you can do is be patient and don't overanalyze any media speculation.

vballgrl88, accept both offers if you prefer Fixed Income over Corp Fin in general. Then just pull out of GE if Bear recovers, or watch Bear sink with GE in hand. This assumes you're not concerned about burning bridges with GE in long term (i.e. full time hiring next year)

JPM's possibly buying Bear for less than $20 a share!? Damnnnnn. I had heard that Dimon was a tough negotiator but ouch. Paying only 25% of book value...

http://seekingalpha.com/article/68708-j-p-morgan-on-verge-of-buying-bear...