Saving Wall Street (For Now)

[Celebration]

http://www.nytimes.com/2008/03/18/business/18sorkin.html?_r=1&ref=business&oref=slogin

The run on Bear began around midday on Wednesday, when a series of banks and hedge funds started a whisper campaign against the firm. The firm was doomed, they said. It was almost broke. But some of the money managers were clearly talking their book. They were obviously shorting Bear’s stock, betting it would decline.

How do I know? Because I was on the receiving end of a handful of phone calls from the Gang of Wall Street Whisperers. All of them offered a variation on the same theme: Bear Stearns is toast; no one is trading with the firm; clients are pulling their money out.

Bear Stearns, of course, was at that very moment telling anyone who would listen all of this was a lie. And I’ll give Alan D. Schwartz, Bear’s chief executive, the benefit of the doubt. I don’t think he saw the end coming. (That is, in part, because he was playing host to a conference of media big shots at the Breakers in Palm Beach while the bank he runs was careering off the rails. That was a better excuse than the one Jimmy Cayne, Bear’s chairman, had last year, as the firm’s troubles deepened. Mr. Cayne was off playing bridge. )

By Thursday, the drumbeat of worries over Bear had grown so loud that my voice mail box was full of gleeful short sellers and panicked investors. The talk built up that evening, as Bear went hat in hand to the Federal Reserve because the firm had run out of money. By Friday, even with the Federal Reserve’s rescue effort by way of JPMorgan in full swing, Bear’s stock fell to $30 a share. People forget that Wall Street is a fragile machine. Cash, or “liquidity,” as it is known in the trade, is the oxygen that keeps investment banks alive. No matter how healthy you are, you can’t breathe if someone puts a pillow over your head. That’s what Bear Stearns’s clients and rivals did, and they did it without remorse.

To this I say, FOLLOW THE MONEY (put owners)

Some people made just incredible amounts of money on this.

[sharesunited]

1. Agreed. Bring heat on those who

benefited from their own wrongdoing and it may have a sobering effect on everyone who tries to play that.

You don't even need to criminally prosecute. Just disgorge the profits and distribute them among the longs and employees who got murdered.

Means test any such distribution, though. No billionaires.