After Bear Stearns, Who May Be Next?

[Purveyor]

NEW YORK (AP) -- After Bear Stearns Cos. said Friday it will have to borrow money through JPMorgan Chase & Co., backed by the New York Federal Reserve, investors are curious: What does this mean for other banks, and who might be next?

Q: Is this going to happen to other investment banks?

A: Nobody knows for sure, but it could. Until proven otherwise, the market will probably act as if there are more near-collapses to come -- just as it did on Friday, when investors sold off their bank holdings and sent the Dow Jones industrial average down 200 points.

"Even though Bear was probably on the fringe, pushing the envelope anyway, traders are saying that because it happened, it could happen to somebody else," said Brandon Thomas, chief investment officer for Portfolio Management Consultants, the investment arm of Envestnet.

Q: Which other institutions might need funding?

A: Bear Stearns has been the weakling among the five reigning Wall Street investment banks: Bear, Merrill Lynch, Morgan Stanley, Lehman Brothers and Goldman Sachs. Many market watchers will recall that last spring, Bear was the first of these institutions to reveal big problems with mortgage-linked debt when it had to pump cash into two hemorrhaging hedge funds.

Also, Bear is the smallest of the five big investment banks, the least diversified, and the biggest issuer of mortgage-backed securities.

But Lehman Brothers Holdings Inc. appears to be an investment bank that investors are very worried about right now -- mainly because it is the investment bank that is most similar to Bear in structure and exposure. Its stock dropped more than 14 percent on Friday.

Banks gave Lehman a vote of confidence of sorts, however, on Friday -- Lehman Brothers said its new credit facility was "substantially oversubscribed," and that some of world's largest banks participated.

Other banks certainly have their own troubles -- Merrill Lynch, for one, wrote down more than $14 billion in the fourth quarter as the value of bonds and debt backed by souring mortgages fell.

---eoe---

http://biz.yahoo.com/ap/080314/bear_stearns_q_a.html

[annabanana]

1. I wish I understood more of this.

JPMorgan & Chase are the ones that got that big bag of loot the day before the huge run up, right? So they are now letting the other banks use it as what? collateral? (or is collateral just for the little people?)

[Golden Raisin]

2. JPMorganChase

is one entity. Chase bought JP Morgan a few years ago and the companies merged. Jamie Dimon is the CEO.

[HCE SuiGeneris]

3. B of A and Countrywide is a clusterf*&k.

Citibank is in no great shape either.

[girl gone mad]

5. Add Wamu to the list. n/t

[El Pinko]

4. Citi - NT

NT

[earth mom]

6. I just watched Suze Orman on PBS talking about women and their money...

I'd love to know what she thinks about this mess! :wow:

[midnight]

7. I have tried to get into her ideas about money.....It just turns me

tepid....I wish someone could snap me into the money game, but I always feel like it is a game with an invisible book of rules...

[DemReadingDU]

8. Lehman Brothers

Lehman Brothers Obtains $2 Billion Bank Credit Line (Update2)

By Andrew Frye

March 14 (Bloomberg) -- Lehman Brothers Holdings Inc. obtained a $2 billion credit line as the investment bank tried to blunt the stock's worst drop in almost eight years and assure investors the firm isn't short on cash.

The unsecured, three-year facility from 40 banks replaces an existing credit line, New York-based Lehman said today in a statement. JPMorgan Chase & Co. and Citigroup Inc., also based in New York, led the effort, the firm said.

Lehman announced the financing hours after Bear Stearns Cos. said it agreed to an emergency bailout by JPMorgan Chase and the New York Federal Reserve. Bear Stearns, which fell 47 percent in New York trading, said its cash position had ``significantly deteriorated'' in the past 24 hours, raising concern among investors that more financial firms may face a liquidity shortage.

more...
http://www.bloomberg.com/apps/news?pid=20601087&sid=aF8soSRIHSE8&refer=home

[DemReadingDU]

9. or maybe National City

3/14/08 National City's shares fall as takeover prospects rise

National City's shares were down more than 10 percent in midday trading Friday as speculation increased that the Cleveland bank's days are numbered.

The bank is being shopped around, according to a report in the Wall Street Journal on March 13.

"The reason the bank is thought to be up for sale is that it continues to have trouble getting control over its destiny," Dick Bove, an analyst with Punk Ziegel & Co., wrote Friday in a report titled, "The next step should be bold."

But the list of potential buyers is a short one.

"National City is a big institution with $150 billion in assets and cannot easily be assimilated by any other bank in the country below the top five."

Wells Fargo (NYSE: WFC), the nation's fifth-largest bank, is among the potential buyers. Chairman Dick Kovacevich recently said the bank will step up its acquisition activity due to market conditions.

National City's branch network includes Ohio, Indiana, Illinois, Michigan, Florida, Missouri and Pennsylvania. The San Francisco bank's branch territory would fit well with National City's dominance in the Midwest.

more...
http://www.bizjournals.com/eastbay/stories/2008/03/10/daily90.html

[Pavulon]

10. Who It will NOT be..

Wachovia
BOA
Your Credit union. (they tend not to make risky loans)
The bank you have your checking and savings account in.

Many companies are "banks" for the sake of transacting business.

If they fail it is not good but does not invoke a collapse.