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That’s correct. Congratulations! You know those hard earned tax dollars of yours, the tax dollars that BushCo decided a couple of weeks ago were best spent to bail out the irresponsible investment bankers on Wall Street, instead of letting them fall flat on their asses while free market capitalism belts out an appropriate punishment to those clowns? (You know, the way that we have always been told that "the system" is supposed to work when it has been abused?)

Your generous donation has enabled a guy who should, at this very moment, be as completely and totally financially bankrupt as his immortal soul is, to pocket about a cool $62 million dollars. He never missed one pricy meal, baby. Talk about laughing all the way to the bank.  Talk about (excuse screaming, please) CORPORATE WELFARE PROGRAMS.  

Yep, our tax dollars made it all possible for James Cayne to take lemons and make lemonade, a whole lot of it. And all of this while Rome burns.

This from tonight’s AP:

http://biz.yahoo.com/...

Bear Stearns Cos. Chairman James Cayne on Thursday sold his holdings in the embattled investment bank ahead of its expected acquisition by JPMorgan Chase & Co.
Cayne sold 5.66 million shares for exactly $10.84 a share for $61.3 million.

As the NY Post reported a couple of days ago, the newly obscenely enriched Cayne has recently hired a bodyguard:

http://www.nypost.com/...

Anger has reverberated all week throughout the gloomy Madison Avenue offices, where dethroned chief Jimmy Cayne has walked around with an armed bodyguard. Starting Monday, when embittered and dazed employees arrived for their first day of work since learning their firm blew up along with the company piggy bank, Cayne's armed hulk of a bodyguard trailed him everywhere and parked himself outside Cayne's office all day, sources said. Some employees say they're furious at the 74-year-old Cayne for going to bridge tournaments during the week the firm crumbled. Cayne is said to be quietly helping British shareholder, Joe Lewis, drum up another suitor for the firm at a much higher price than Dimon's bargain basement deal as low as $2 a share.

One has to wonder how "embittered and dazed" those employees will be tomorrow morning. I’d be amazed if Jimmy doesn’t request some sort of "work from home" accommodations starting, like, immediately.

This is appalling beyond words. Our tax dollars give Cayne and his company an undeserved second chance and the first thing the guy does, besides playing bridge for a week, is find a way to hike up his worthless shares so that when he finally cashes in, he’s getting multiple times as much money for something that is essentially worth nothing.

I don’t know about Cayne’s employees, but I myself am waaaayyyy beyond "embittered" at this point. These guys think that they are going to get away with completely destroying the integrity of our financial system and then running off with whatever may be left of our childrens' future. And you know what? They probably will.

Originally posted to armenia on Thu Mar 27, 2008 at 07:08 PM PDT.

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Comment Preferences

  •  Hi everyone! (27+ / 0-)

    It's my first time. You have been my teachers. Tips? Grades? Suggestions? Anything? Thanks.

    "God is not on the side of the heavy battalions, but of the best shots."- Voltaire

    by armenia on Thu Mar 27, 2008 at 07:09:22 PM PDT

  •  Only 62m? Poor guy will need to take (2+ / 0-)
    Recommended by:
    AntKat, armenia

    another job.

    Once in a while you get shown the light in the strangest of places if you look at it right.

    by darthstar on Thu Mar 27, 2008 at 07:10:21 PM PDT

  •  This needs to be all over the news! (2+ / 0-)
    Recommended by:
    AntKat, armenia

    "I'm not against all wars. I'm against dumb wars." Barack Obama

    by DWKING on Thu Mar 27, 2008 at 07:11:00 PM PDT

  •  Tipped and rec'd (3+ / 0-)
    Recommended by:
    clammyc, Phil S 33, AntKat

    This scumbag does need a bodyguard.  I hope he never sleeps well again for a long, long time.

  •  Looks like he already owned it, so we didn't pay (1+ / 0-)
    Recommended by:
    Scipio

    anything.

    "[G]lobalization is...increasing the efficiency of resource allocation through stronger capital markets" - Barack Obama

    by burrow owl on Thu Mar 27, 2008 at 07:12:19 PM PDT

    •  I think the argument here is that (14+ / 0-)

      the stock should have been $2 per share, or even less.  Then the Fed stepped in and propped Bear Stearns up so the JP Morgan could buy it.  Then the price was "renegotiated" to $10 per share.

      This fucker should have gotten $0.

      Take it from a guy who worked at Andersen when it went under.

      •  So the question is just whether the BS bailout (1+ / 0-)
        Recommended by:
        baahl

        was good.  Reasonable people can differ on that.  Following Brad Delong, better a bailout than a catastrophe.

        "[G]lobalization is...increasing the efficiency of resource allocation through stronger capital markets" - Barack Obama

        by burrow owl on Thu Mar 27, 2008 at 07:59:20 PM PDT

        [ Parent ]

        •  well clearly the bailout and fire sale to JPM (1+ / 0-)
          Recommended by:
          armenia

          were less than transparent, since now the ostensible reason for helping them out (the greater good of the "economy") is seriously divorced from reality: that no one thought to in any way limit or curb the cash-out of Bear's CEO speaks volumes about where the real priorities of this entire affair are and were.

          •  It's his stuff; how would we limit it, and why (0+ / 0-)

            should we?  At a minimum, it raises certain 5th amendment problems, doesn't it?  If it's unvested stock or options or something, have at it, but this was just his private holdings.

            "[G]lobalization is...increasing the efficiency of resource allocation through stronger capital markets" - Barack Obama

            by burrow owl on Thu Mar 27, 2008 at 08:07:29 PM PDT

            [ Parent ]

            •  it's not "his" stuff if the company is bankrupt (1+ / 0-)
              Recommended by:
              armenia

              and this company was, effectively, just that. The only good reason for the Fed/JPM to get involved is to prevent economic collapse or ripple effect, so why not make an example and structure the deal such that it does not come off as a way of screwing the little guy? This deal was unprecedented. If Bear had been allowed to fail like a normal business would have been, the CEO would have gotten nothing.

            •  His private holdings that weren't (1+ / 0-)
              Recommended by:
              gnat

              worth much more than crap two weeks ago, until we bailed him out.

              "God is not on the side of the heavy battalions, but of the best shots."- Voltaire

              by armenia on Thu Mar 27, 2008 at 08:17:24 PM PDT

              [ Parent ]

          •  What does transparency have to do with it? (0+ / 0-)

            The point is to prevent the counterparties from collapsing along w/ BS.

            "[G]lobalization is...increasing the efficiency of resource allocation through stronger capital markets" - Barack Obama

            by burrow owl on Thu Mar 27, 2008 at 08:08:23 PM PDT

            [ Parent ]

            •  everything (1+ / 0-)
              Recommended by:
              armenia

              since it's about restoring confidence in the market. This now makes it look like the game was even more rigged than we thought.

              •  No, It Really Doesn't (1+ / 0-)
                Recommended by:
                baahl

                The Fed doesn't know, and nor does it care, what you think about the market, and if you feel the system is rigged because the CEO could sell his stock.

                When the Fed talks about confidence and stability, they're talking about what China sees, what the Saudis see, what the Europeans see, what people who trade and process millions of dollars a day see. That's who the Fed wants to reassure.

                To the people it cares about $62 million (and more generally, executive compensation) doesn't matter - it's chump change compared to what they spend and the damage they can do. Executive compensation makes individuals feel shafted, and that's the government's job to worry about. Financial institutions collapsing make foreign governments and institutional investors nervous, and that's the Fed's job to fix.

                AT&T offers exciting work for recent graduates in computer science. Pick up the phone, call your mom, and ask for an application.

                by Scipio on Thu Mar 27, 2008 at 08:25:03 PM PDT

                [ Parent ]

                •  no shit (0+ / 0-)

                  once again you miss my point completely. The confidence also has to flow to investors and shareholders (Chinese, American, etc), both big and small, and once they fathom that the big guys (like this one) are all jumping ship, the market will tank again. Propping up Bear was a short-term good idea, but the failure to actually tie it to any reform is a long-term disaster--and this proves it.

                •  This is exactly what needs to change: (1+ / 0-)
                  Recommended by:
                  gnat

                  The Fed doesn't know, and nor does it care, what you think about the market, and if you feel the system is rigged because the CEO could sell his stock.

                  The time to have a "national discussion" about how much our democratic government gives a crap about what we peons think is long, long overdue.

                  Add in the fact that "The Fed", from all outward appearances, is currently engaged in driving our country into the ground.  

                  "God is not on the side of the heavy battalions, but of the best shots."- Voltaire

                  by armenia on Thu Mar 27, 2008 at 08:43:29 PM PDT

                  [ Parent ]

    •  Yeah, but what he owned was worth nada (9+ / 0-)

      -or at least pretty much nothing two weeks ago. He would never have gotten $62 million dollars without the tax payer bailout. Our money, finally put to good use. Not.

      "God is not on the side of the heavy battalions, but of the best shots."- Voltaire

      by armenia on Thu Mar 27, 2008 at 07:18:36 PM PDT

      [ Parent ]

  •  When is one an insider for (4+ / 0-)

    INSIDER TRADING?

    For Christ's sake, this is an obvious jail term.  The new Attorney General under the Obama administration is going to be a busy woman.

    If you want to vote for somebody with whom you are in perfect agreement, be prepared to put your name on the ballot : Tom Schaller

    by captainlaser on Thu Mar 27, 2008 at 07:13:39 PM PDT

    •  Insider trading (2+ / 0-)
      Recommended by:
      NoBigGovernment, Johnny Rapture

      is only illegal if you trade based on private knowledge of the company.

      In this case, insider trading would've meant unloading his shares before the fall.  Not afterward when he got a fraction of the value.

    •  Do you know what insider trading is? (1+ / 0-)
      Recommended by:
      Johnny Rapture

      Seriously? Because if you think this is it, you're in a whole new world of wrong.

      Technically, this is insider trading, in that insider trading is defined as any trading activity by an officer that owns more than 10% of a company. It's not, however, in any way illegal. If it's just normal trading, there's nothing illegal about it - although many directors will file plans in advance for their sales to make sure there's no image of illegality.

      What (I assume) you're referencing is illegal insider trading, which is what one generally means when they say "insider trading." Rules regarding that are based on the idea that a free market requires the free and equal flow of information, and that when a a director uses information to make a trade that's not public, they've been deficient in their fiduciary duty to the shareholders of the company.

      From that perspective, this guy has done nothing wrong. Maybe you've been under a rock recently, but it's no secret that BSC shares are nearly worthless now. Unless the price spikes significantly downwards tomorrow, there's no evidence that the guy has done anything illegal - he's simply dumping his shares (which will soon have even less value), because there's a market to buy them at a premium - led by bondholders who want shares so they can vote in favor of the deal with JPM.

      AT&T offers exciting work for recent graduates in computer science. Pick up the phone, call your mom, and ask for an application.

      by Scipio on Thu Mar 27, 2008 at 07:23:41 PM PDT

      [ Parent ]

      •  Not insider trading, (0+ / 0-)

        simply using taxpayer money wisely? To pump up your shares. Shouldn't this guy be working to fix the damage he has caused, not playing bridge and worrying about how to juice more money out of his shares? Or is that all well and good, I guess, in the good old USA?

        "God is not on the side of the heavy battalions, but of the best shots."- Voltaire

        by armenia on Thu Mar 27, 2008 at 07:29:35 PM PDT

        [ Parent ]

        •  I'm not saying (2+ / 0-)
          Recommended by:
          Johnny Rapture, armenia

          This guy is an angel, or that everything he's done is honest.

          What I am saying is that of all the accusations you can throw at him, insider trading ain't one of them.

          AT&T offers exciting work for recent graduates in computer science. Pick up the phone, call your mom, and ask for an application.

          by Scipio on Thu Mar 27, 2008 at 07:31:03 PM PDT

          [ Parent ]

          •  You are wrong. This was illegal. (1+ / 0-)
            Recommended by:
            armenia

            He knew that investors were taking money out of BS like it was on fire.

            "It's the planet, stupid."

            by FishOutofWater on Thu Mar 27, 2008 at 07:37:58 PM PDT

            [ Parent ]

            •  Math (0+ / 0-)

              He sold on Tueaday at $10.84 a share. If you look at the one-month chart,  you'll see that the Bear "crash" was around the 14th - from that Friday to the Monday, it went from $57 to $4/share.

              If he was gonna do some insider trading, he would have done it around the $30 price point, somewhere on the afternoon of the Friday. Alternatively, he would have waited a bit, and sold today (with a close of $11.23) which would have made him an extra $220K.

              As for him knowing that investors were taking money out of BSC on Tuesday "like it was on fire", that's true - however, I also knew that, as did anyone who was watching Bloomberg or CNBC. To be specific, however, not all investors were taking their money out. Stockholders were dumping what they could, but bondholders were buying all they could, to get votes for a buyout.

              AT&T offers exciting work for recent graduates in computer science. Pick up the phone, call your mom, and ask for an application.

              by Scipio on Thu Mar 27, 2008 at 07:52:37 PM PDT

              [ Parent ]

              •  You rationalize. He had to hold his stock. (0+ / 0-)

                Under these conditions he was obligated to hold onto his stock.

                I held shares in a very small computer company my father was an executive in when I was about 18. I sold them for a handsome profit when the price seemed ridiculously high, but I had no special knowledge.

                "It's the planet, stupid."

                by FishOutofWater on Thu Mar 27, 2008 at 08:01:01 PM PDT

                [ Parent ]

          •  Glad I don't know anything about it then (0+ / 0-)

            or I may have accused him of it or something. All I know is that he worked his way into pretty much nothing until Bush gave him tons of our money to play with. Money we will never see again.

            "God is not on the side of the heavy battalions, but of the best shots."- Voltaire

            by armenia on Thu Mar 27, 2008 at 07:44:18 PM PDT

            [ Parent ]

            •  But that's not (1+ / 0-)
              Recommended by:
              Scipio

              technically true. The government has insured $29 billion, but it hasn't paid anything yet. Now, it's outrageous that the government is insuring privately-held debt in our name, but taxpayer money has not directly flowed to this guy. Certainly he would not be getting $10/share today without that bit of government largesse, but that isn't the same thing.

              The real crime here is why did the government agree to back all the risky loans and then let JP Morgan have the rest? That is an incredible sweetheart deal. Instead, the government should have appointed a competent supervisor to rebuild the company, get it profitable, then sell it off. That would have made a profit for the taxpayers to compensate the absurd liability AND would have kept many of the employees on the payroll.

              •  but taxpayer money has INDIRECTLY flowed (0+ / 0-)

                to this guy, and that much is irrefutable. He has cashed out and been allowed to walk after securing a share price better than zero. He has made out like a bandit, and had to suffer zero consequences for his mismanagement. Indeed, he has been rewarded for his mismanagement.

                •  you know... (1+ / 0-)
                  Recommended by:
                  gnat

                  the shareholders will go after him. Don't be surprised if that costs him that 62m and then some.

                •  Of course. (2+ / 0-)
                  Recommended by:
                  gnat, baahl

                  This thread seems to weaving between a lot of different points. What I am stating is that:

                  1. The money he is walking away with is not "taxpayer money." It is from the sale of shares whose value is based on taxpayers insuring the company's shaky investments. If those investments do go bad, then, yes, taxpayer money will have bailed him out. But as of right now, the taxpayers have paid nothing.
                  1. It's not insider trading-- the sale occurred after the collapse.

                  Other than that, yes:

                  • This deal stinks to high heaven, the epitome of US fake capitalism.
                  • JP Morgan makes out like a robber baron (some things never change).
                  • Cayne is a complete and utter dick that should be sued by every shareholder continuously for the rest of his life (a distinct possibility).
                  • This deal should be examined by a new Justice Dept immediately in 2009.

                  •  the net effect (0+ / 0-)

                    is that we have propped up Bear long enough for Cayne to cash out. Whether or not our propping up Bear, and JPM's buying Bear, has any long term effect on the economy remains to be seen. I agree that nothing visibly illegal has occurred here, but I am struck by the fact at how few concessions were given to the Fed for their stepping in. Consider that Bear and JPM and their accountants know how to cook books like no other, and that given how fundamentlaly risky, speculative, overextended and complex the market (w/the subprime crisis and the derivatives/hedge fund markets) has become, the demise of Bear in such sudden fashion can only mean one thing: it was so bad they could no longer even find ways to cook the books enough to make it through the recent storms.  This was an 11th hour salvage job, and the Fed should have (if they had any sense) said: "we know you are in bad shape, Bear, and we want to help, but we also want to restore confidence in the market, so none of you guys are going to get rich here..." The Fed held all the cards. And surely they have ex-Wall Street guys who knew that. So what exactly did they get? The idea that they could not at least make an example of some of Bear's execs is just naive. What recourse did Cayne have  before this deal went down? Whatever the details, Bear must have been hemorrhaging astronomical sums of money in the follow up to all of this. I think the $2 a share deal was a fire sale, and I'm still not sure it's impossible that a deal went down whereby they agreed in advance to a $10 deal--but would trot it out as a $2 deal first.

                    •  if there was fraud (0+ / 0-)

                      it will come to light. He will get sued and that $62M will end up going to the investors who were the direct victims of the fraud...  People will go to prison, etc.    Just because it hasn't happened yet or doesn't happen in connection with the buy out doesn't mean it won't happen.

                      •  at the very least it was legal fraud (0+ / 0-)

                        and that's been my whole point on this thread. The Fed ostensibly stepped in for the sake of the greater good, not to line this guy's pockets. If the Fed could not figure out how to limit the damage in such a way that this guy was not able to cash out so big, what faith should we have in them about the deal itself? It throws the entire reasons for the deal into question. Now the other investment banks, especially their CEOs, are pretty happy: they have been given access to the Fed's (re: our) money (I wrote a diary about this recently: they are ALL now doing this), have been asked for no real accountability or new regulatory checks and balances, and their CEOs know that, whatever else happens, they will be taken care of. The Devil is in the details, and the double-standard details of this deal, as I understand them , suck.

              •  The benefits associated (1+ / 0-)
                Recommended by:
                gnat

                with the fact that that money is available to him kept him from going bankrupt and essentially having nothing right now. Taxpayer money propped him up long enough for him to cash out with 62 million after he ran a huge major company that obviously affects us all, even if we have never even heard of it, into the ground.
                He got his 62 million, what does he care what happens now?

                "God is not on the side of the heavy battalions, but of the best shots."- Voltaire

                by armenia on Thu Mar 27, 2008 at 08:29:59 PM PDT

                [ Parent ]

      •  This is illegal insider trading (0+ / 0-)

        He knew that BS was in deep shit and dumped his stinking shares based on insider knowledge.

        "It's the planet, stupid."

        by FishOutofWater on Thu Mar 27, 2008 at 07:36:49 PM PDT

        [ Parent ]

    •  I don't think Michelle... (0+ / 0-)

      can hold a Cabinet position.

      Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety. - Benjamin Franklin (probably)

      by C Dawgg on Thu Mar 27, 2008 at 07:24:58 PM PDT

      [ Parent ]

    •  I dont think it was insider trading or he would (0+ / 0-)

      of dumped BS stock earlier..Even Friday before BS Blaaak Monday the stock was at 50 Bucks a share..I mean the guy is 72[Like Big John McSame]so maybe he was unaware of the plight of BS..As far as the other stock holder, employees, and thier pension funds..Cayne dont give a fuk..Now its off to the Riviera and alittle R&R and some Bridge tournaments..And who among us dont think that Cayne is a Bridge Cheater..

      "Better a little late, than a little never"..Doctor Julian Winston

      by Johnny Rapture on Thu Mar 27, 2008 at 07:33:11 PM PDT

      [ Parent ]

      •  You know what though? (0+ / 0-)

        Why would he be stupid enough to dump the stock before he got the taxpayer $$$ that I am very sure he must have had some idea he was gonna get way before almost anyone else did.

        "God is not on the side of the heavy battalions, but of the best shots."- Voltaire

        by armenia on Thu Mar 27, 2008 at 07:48:58 PM PDT

        [ Parent ]

        •  If (1+ / 0-)
          Recommended by:
          Johnny Rapture

          He knew this would happen, he would have sold before it crashed - which would have allowed him to get ~$70 a share, as opposed to $11.

          As for him being sure the buyout offer would move up from $2 to $10, an hour of watching CNBC also told you that was gonna happen a few days before it did. $2 was simply too low a price, and the institutional BSC shareholders would have almost certainly voted it down (to take their chances elsewhere).

          Lastly, as I've said before, the taxpayers didn't give him shit. If anyone, the bondholders did, as they forced the deal to go from $2 to $10.

          AT&T offers exciting work for recent graduates in computer science. Pick up the phone, call your mom, and ask for an application.

          by Scipio on Thu Mar 27, 2008 at 07:58:52 PM PDT

          [ Parent ]

          •  he could not have sold before (0+ / 0-)

            the crash: it would have sent off alarm bells that he knew the company was about to tank, and he might have had to suffer penalties for failing to disclose what he knw about the company's poor fiscal health.

          •  Taxpayers gave him the chance to stay viable (1+ / 0-)
            Recommended by:
            gnat

            long enough to cash in on the "booby prize." Without the taxpayers, he would have faced bankruptcy. Stop making us sound like a bunch of inconsequential peons in the worthy big-boy's game. They sure come around when they need to use us.

            "God is not on the side of the heavy battalions, but of the best shots."- Voltaire

            by armenia on Thu Mar 27, 2008 at 08:08:44 PM PDT

            [ Parent ]

        •  What are you talking about? (0+ / 0-)

          He didn't get "taxpayer $$$"-- he sold his stock for about $10.84/share to someone who thinks the company will ultimately be sold for more than $10/share. If he had sold it at $50/share he would have made $283 million. That would have been insider trading though.

          •  While (1+ / 0-)
            Recommended by:
            baahl

            I agree with your overall sentiments on this buyout (and there aren't that many of us), I don't think buyers are really out there because they think it will be worth more than $10. While that's certainly motivating some buyers, I reckon most buying is driven by bondholders who want shares to vote Yes with for the buyout, so that their debt doesn't become worthless.

            AT&T offers exciting work for recent graduates in computer science. Pick up the phone, call your mom, and ask for an application.

            by Scipio on Thu Mar 27, 2008 at 08:28:19 PM PDT

            [ Parent ]

          •  He got the benefit of having taxpayer money (0+ / 0-)

            behind him after he ran the company into the ground. He was bankrupt and would not have seen much of squat without our billions propping him up. That enabled him to cash out, despite his horrendous leadership. Playing with taxpayer billions got him the "boobie prize" of $62 million. Taxpayers made it all possible for this jerk.

            "God is not on the side of the heavy battalions, but of the best shots."- Voltaire

            by armenia on Thu Mar 27, 2008 at 08:35:32 PM PDT

            [ Parent ]

  •  Makes me feel a LOT better about (2+ / 0-)
    Recommended by:
    AntKat, armenia

    Larry Ellison getting a three million dollar tax cut on his estate

    It consists of a nearly 8,000-square-foot main house with two wings, a guest home, three cottages and a gymnasium as well as a 5-acre man-made lake, two waterfalls and two bridges. Hundreds of mature cherry, maple and other trees were planted among nearly 1,000 redwoods, pines and oaks

    ,  Larry needs the break, he's only worth $24 Billion.

    I'd personally, like to see a candidate that was actually running on taking away the vast bulk of these guys treasures and just leave them filthy, as opposed to, obscenely rich.  Wonder how many other houses he has tucked away around the world?

  •  Hoping Edwards gets that job (1+ / 0-)
    Recommended by:
    AntKat

    in any case. Not that there aren't a whole bunch of excellent places to put a whole lot of excellent ladies when the change comes.

    "God is not on the side of the heavy battalions, but of the best shots."- Voltaire

    by armenia on Thu Mar 27, 2008 at 07:22:03 PM PDT

  •  As much as it upsets us, (1+ / 0-)
    Recommended by:
    Scipio

    you can't simply ignore the fact that they did the right thing here. To do nothing would have had horrible consequences for our economy.

    To say that we should not have done this because this guy cashed out when he shouldn't have got anything, is like saying that we shouldn't have welfare because there are some people who get benefits that aren't entitled to them.

    •  perhaps but then why not structure the deal (2+ / 0-)
      Recommended by:
      Johnny Rapture, armenia

      in such a way that it either nulls or limits how much the executives can cash out? As it is, the $8 increase in the fire-sale share price (from $2 to $10) seems like it was designed just so this guy could get his golden parachute: rewarded for running the company into the ground. It's diabolically wrong, even if it proves to be legal. And what I'm really curious about is what was actually said at that first meeting between the Fed, Bear and JPM. Boy how I would like to be a fly on that wall. My overall point is the bail-out/prop-up/fire-sale could have AT LEAST been done in a way that does not smell funny. How do we know for sure this guy is not discreetly kicking back part of his $62 million windfall to insiders in the Fed AND in JPM? Just asking.

      •  structure is bad (1+ / 0-)
        Recommended by:
        armenia

        we contributed enough to make a company that had a net negative value, and made it worth $1 billion.  Even the $250 million was only good because we put up loan guarantees for $30 billion.    

      •  I would tooo..But we couldnt evun went on at (0+ / 0-)

        the fukin bush WH whaen cheney and The Big Enurgy Boys had their Private Enurgy Meetings ! I mean I could understand that in Russia or China, thias aint Russia or China is it ?

        And what I'm really curious about is what was actually said at that first meeting between the Fed, Bear and JPM.

        Forget about it..One thing these fuks are goood at is saying in lock step and keeeeping their yaps shut..Maybe this is one of Blaaakwater's functions..Mafia style, or nazi style

        "Better a little late, than a little never"..Doctor Julian Winston

        by Johnny Rapture on Thu Mar 27, 2008 at 07:42:53 PM PDT

        [ Parent ]

      •  Ah man, cmon. (0+ / 0-)

        As it is, the $8 increase in the fire-sale share price (from $2 to $10) seems like it was designed just so this guy could get his golden parachute

        That's simply ridiculous. You seriously think people agreed to pay an extra $8 a share simply so he could get more money? I'm going to assume you didn't really mean that.

        And

        How do we know for sure this guy is not discreetly kicking back part of his $62 million windfall to insiders in the Fed AND in JPM? Just asking.

        is even worse. Are you serious? Let me put my tinfoil hat on for a moment.

        How do we know welfare wasn't designed to keep the black man under the government thumb? How do we know GWB wasn't behind 9-11? How do we know that the CIA didn't assasinate JFK? Ok, maybe that's a bad example, but you get my point.

        •  so you don't think (1+ / 0-)
          Recommended by:
          armenia

          this guy (who was part of Anderson when Enron went down, and thus specializes in cooking books) and likely many of his fellow travellers in JPM could figure out a way to siphon off parts of the $62 million windfall he's now due to receive? They're paying eachother, for chrissakes, and doing it with the Fed's blessing. $62 million dollars is a lot of money. Bear was, for all intents and purposes, bankrupt. Not only that, but it's liquidity was such that we may never know how in the hole/overextended it really was: see the derivatives mess. It's absolutely naive in the extreme to assume everything about the deal that began when the Fed, JPM and Bear sat down is totally 100% above board. It's naive b/c the deal is so unprecedented and b/c so much was at stake and b/c it was all done in secret.

          •  Siphon? (2+ / 0-)
            Recommended by:
            baahl, NoBigGovernment

            There's really no need to siphon anything - the money he makes from dumping the stock is his.

            As for raising the price from $2 to $10, that was forced by the institutional investors. Once they saw that the Fed was willing to step in and take off the loans (which it said it would, as a case of policy), they knew that $2 was a sweetheart deal, and that they would likely be able to get a better deal somewhere else - aside from that portfolio, BSC wasn't a bad company.

            As for structuring it so that the executives couldn't cash out, that's somewhat difficult to do. They're shareholders like anyone else, with the same rights to buy and sell things. That price going up helped individual employees who had their life savings in BSC as much, if not more, than it helped him - they're the real winners (if you can call anyone holding BSC a winner) in this.

            Lastly, you're wrong about $62 million being a lot of money. In general terms, yes, but to people in that circle, it's not really all that much. Cayne's average annual compensation is about $30 million, so while it's two years of income, when you have that kind of coin it's mostly just to keep score.

            Interestingly, BSC doesn't have any provisions for golden parachutes in their compensation plans, which makes them remarkably responsible. This means that it's unlikely that Cayne will get a huge payout from JPM when he's bounced for being an idiot, which is unlike most CEO compensation packages (which say that they're guaranteed a certain payout when they're fired, no matter what).

            AT&T offers exciting work for recent graduates in computer science. Pick up the phone, call your mom, and ask for an application.

            by Scipio on Thu Mar 27, 2008 at 08:12:11 PM PDT

            [ Parent ]

          •  Are Cayne's defenders really so naive? (0+ / 0-)

            That was very charitable of you. I was thinking of another word.  

            "God is not on the side of the heavy battalions, but of the best shots."- Voltaire

            by armenia on Thu Mar 27, 2008 at 08:13:35 PM PDT

            [ Parent ]

      •  Absolutly, spot on gnat, n/t (1+ / 0-)
        Recommended by:
        gnat

        "God is not on the side of the heavy battalions, but of the best shots."- Voltaire

        by armenia on Thu Mar 27, 2008 at 07:50:34 PM PDT

        [ Parent ]

  •  to be fair (0+ / 0-)

    you only personally gave him about $0.50

    •  Actually it's more like $0.00 (1+ / 0-)
      Recommended by:
      Scipio

      He got that money from people who bought his shares from him on the stock market.

      The government's loan is certainly what made those people willing to pay more.  But it isn't like a rising stock price was directly paid for by the people.

      •  what was the value of the stock (1+ / 0-)
        Recommended by:
        gnat

        without government intervention?

        Which, btw, I'm not saying was a tenable strategy for dealing with the situation.

        •  The value of the stock without (1+ / 0-)
          Recommended by:
          baahl

          intervention was indeed $0 (or whatever they would've gotten from bankruptcy, I have no idea about those sorts of things).

          But just because a taxpayer-backed loan caused the raise in stock price doesn't mean we actually paid for it.  I thought it was a little bit misleading.

          •  Trust me, (0+ / 0-)

            we are paying for it.  It's $30 billion we won't have for our kids, our seniors, our schools, our infastructure, and everything else that makes a country worth living in. But BS will continue to have everything it needs to keep going with no gaurantee whatsoever that this is even gonna make a difference in the long run.

            Yeah, yeah, I know, 'this will keep the financial system together.'

            That still remains to be seen doesn't it? Besides, it should never have come to this.

            "God is not on the side of the heavy battalions, but of the best shots."- Voltaire

            by armenia on Thu Mar 27, 2008 at 08:52:34 PM PDT

            [ Parent ]

            •  we are where we are (0+ / 0-)

              Keeping banks lending, keeping the interest rates low and helping people refinance out of bad ARMs is absolutely critical to keeping our economy from collapsing and has a very real effect on ordinary people, not just fat cats.

              I wasn't looking through this whole thing but mortgage rates are only a touch higher when this whole thing started.  This would not likely be the case had the Fed not demonstrated that they were willing to help lenders manage the risk of their existing loans.

      •  the net effect (1+ / 0-)
        Recommended by:
        armenia

        is the same however, since if Bear had been forced to face what any normal company faces when it is teetering on the edge of bankruptcy the CEO would not now be getting $62 million. The lack of transparency in this entire affair stinks: the assumption remains that the Fed, Bear and JPM all know what's best for the economy. But given that this guy could have cashed out at $2 and not $10 a share, the whole thing stinks to high heaven--to put it mildly.

      •  The company was going to go bankrupt (0+ / 0-)

        without billions of dollars of taxpayer money, that is badly needed now by the American people. What would he have gotten then? I venture to say nor 62 million dollars.

        "God is not on the side of the heavy battalions, but of the best shots."- Voltaire

        by armenia on Thu Mar 27, 2008 at 08:01:32 PM PDT

        [ Parent ]

      •  We all gave him the 30 billion $ (1+ / 0-)
        Recommended by:
        gnat

        taxpayer guarantee that kept him from going bankrupt and ending up with nothing . This further enabled him to cash out with $62 million. Which is, according to some 'really really smart' people here is 'no big deal' at all. What a crook. Sure sounded like a big deal when they were absolutely melting down over it on Wall Street and the MSM and at all the secret Fed meetings a couple of weeks ago.

        "God is not on the side of the heavy battalions, but of the best shots."- Voltaire

        by armenia on Thu Mar 27, 2008 at 09:10:39 PM PDT

        [ Parent ]

        •  agreed but Cayne's only as crooked (0+ / 0-)

          as the system's allowed him to be. Right now the CEO's of the other bigb investment firms are smiling, b/c they all know that whatever happens they will still make out like bandits. We've legalized and legitimized financial fraud in this country.

  •  yup pretty slimy in a major way (1+ / 0-)
    Recommended by:
    armenia

    but hey what do you expect, its the me society...

    accountability and responsibility.  the two key elements that every citizen must have in a country to make it work. and the two that are sorely missing in the USA.

    Welcome to the empire. life is not a dress rehearsal My record label: www.11mileswestofnowhere.com

    by johnfire on Thu Mar 27, 2008 at 07:39:08 PM PDT

  •  What Happened (3+ / 0-)
    Recommended by:
    baahl, Johnny Rapture, avava

    A reminder, as most people don't seem to understand the mechanics of the bailout.

    About three weeks ago, there was a large chunk of BSC's outstanding securities that had a value of about $30 billion. Turns out they're not worth that much; information which caused the company to (effectively) fail. Seeing the instability this would cause, the Fed wanted a bailout, and wanted one quick. Noticing that aside from this chunk of shitty loans, Bear's an OK company, the Fed said "Hey JPM, why don't you buy this thing, and we'll deal with the loans." JPM said yes, so off we go.

    What do I mean by "deal with the loans?" The Fed has taken control of the securities in question, and removed them from the BSC sheets (which makes the company worth buying). They've also made a deal with JPM which says that the Fed will, over the next ten years, sell off all the securities. If the total amount received is more than thirty billion, the Fed pockets the profit. If it makes less, JPM takes the hit for the first billion, and the Fed will cover the rest.

    Thus, the taxpayer hasn't given him shit all. If anything, the bondholders of BS (who want the deal approved) have given him the money, but I don't even really like that reasoning. The Fed did what it had to do to step in and stabilize the system, and in the process, this guy (and the other employee share-holders, of which there are many) were able to get out slightly less bad.

    AT&T offers exciting work for recent graduates in computer science. Pick up the phone, call your mom, and ask for an application.

    by Scipio on Thu Mar 27, 2008 at 07:40:54 PM PDT

    •  you spin well (1+ / 0-)
      Recommended by:
      armenia

      but here's the rub (one of many):

      ...the Fed said "Hey JPM, why don't you buy this thing, and we'll deal with the loans." JPM said yes, so off we go.

      You and I know this is not how the deal (between the Fed, Bear and JPM) went down. That deal was done in secret, and JPM almost certainly said "yes, we'll save their ass, but we want something in return..." That we don't know what went down is part of the problem. Furthermore, why did the CEO not cash out at $2 a share? My guess is the $8 increase was part of a backroom deal that allowed him (and others; we may never know) to at least get something close to the billions he was "worth" (on paper). There's a lack of transparency in this entire process that flies in the face of restoring confidence in the system.

      •  You're Right (0+ / 0-)

        There's no way that the Fed freely offered to assume the loans in question, but that's not really my point.

        The Fed decided that they wanted a buyout to stabilize the system, and that JPM was the group to do it (a decision that there's been strikingly little transparency on). They then asked what it would take for JPM to do it, and they likely came up with a proposal similar to the one that went through. Either way, the Fed decided it wanted an outcome, and negotiated what it needed to offer to get one.

        As for why the CEO didn't cash out at $2, my argument would be because he - and everyone else that watched any financial news on TV - knew that the offer would go up. BSC is/was held by a whole bunch of institutional shareholders who knew that if the Fed was gonna put this offer on the table, they could get better than $2/share.

        AT&T offers exciting work for recent graduates in computer science. Pick up the phone, call your mom, and ask for an application.

        by Scipio on Thu Mar 27, 2008 at 08:17:51 PM PDT

        [ Parent ]

  •  I didn't give it to him (2+ / 0-)
    Recommended by:
    Scipio, armenia

    This Bear Sterns bail out is with borrowed money. Probably borrowed from the Chinese, maybe the Saudis. Hell, 90% of Wall St is just financial air, bought on margin. Nothing backs it up. Not earnings. Not assets. Just blips on a computer screen. It's an illusion. A roller coaster ride and we have come over the peak and are heading down. And the regulators disabled the brakes ten years ago.

    Doubt me? Last year Cayne's stock was worth over a billion dollars. Today it's worth $61 million. Where did it go? Poof! It never existed in the first place. Cayne's got his though. $61 mil is better than a poke in the eye with a sharp stick. I bet he buys property, off shore. Maybe next door to to Bush in S. America. They can play canasta together in their old age, sipping Cuba Libres.

    We better be careful how we waste China's money or someday they are gonna' come over here and crack some heads.

  •  We will be hearing a lot more about (2+ / 0-)
    Recommended by:
    gnat, armenia

    this strange stock transaction.

    •  let's hope so (1+ / 0-)
      Recommended by:
      armenia

      but I'm sure the teams of lawyers will all claim it's perfectly legal, and chances are they're correct. The problem is that the entire process of the bailout, fire sale to JPM, and now this guy's windfall, have all happened under a veil of secrecy. So whatever deals were struck in advance we are not privy to.

      •  what was the alternative to bailing out BS? (0+ / 0-)

        and what were the down stream consequences?  Do you really think that would be better.

        •  it's not an either/or proposition (1+ / 0-)
          Recommended by:
          armenia

          if the Fed was right to help them out, they might have had the common sense (assuming they give a shit) to get something in return: like a guarantee that the CEO would not make himself really rich at their expense. There are a lot of things that could have been done to ensure the Fed's aid was not being wasted. For instance, what confidence in the market does this recent news give? Not much.

        •  The Alternative (0+ / 0-)

          From what I could tell, this sounded like it was meant to prevent a domino effect.  Lenders created mortgages with customers they knew could never pay back these loans.  The loans were bundled with other good loans and used as collateral for large margin trades.  So if the Fed didn't cover these bonds, all of the mortgage collateral would be unreliable and it would start off a chain reaction of margin calls.  Now that the Fed has stepped in these mortgages, including at other firms than Bear Stearns, can still be used as collateral for previously opened margin trades.  The alternative would be similar to my understanding of how the Great Depression got started.  Maybe someone who knows more about this than I do can confirm if this is accurate.

          "It's OUR money".no it ain't. It's the Peoples Republic of China's money. You just borrowed it-and anybody want to bet they probably will want it back? -daulton

          by Eric Novinson on Thu Mar 27, 2008 at 08:30:58 PM PDT

          [ Parent ]

        •  The BS shareholders should be wiped out, (0+ / 0-)

          especially Cayne.

      •  Of All (1+ / 0-)
        Recommended by:
        armenia

        The things in this deal to be pissed off about, I find it somewhat funny that it's that the CEO sold his shares at $11 (as opposed to $2) that makes you angry.

        AT&T offers exciting work for recent graduates in computer science. Pick up the phone, call your mom, and ask for an application.

        by Scipio on Thu Mar 27, 2008 at 08:20:31 PM PDT

        [ Parent ]

        •  that's not at all what makes me angry (1+ / 0-)
          Recommended by:
          armenia

          I'm bringing it up b/c it smells funny. My anger is mostly at the fact that all the larger reasons for the Fed stepping in are now effectively negated: I'm now highly dubious about the motives for this deal. If the Fed stepping in was to save the "economy," then the deal should have been both more transparent and also structured in such a way as to build some confidence in the system. Does this make you confident? Do you really believe the Fed thought this thing through? I see them (re: us) getting taken for a ride by both Bear and JPM.

        •  That's not the point (0+ / 0-)

          the point is that he used the "system" to avoid bankruptcy, whereby he would have gotten nothing,  which is what, after totally screwing his shareholders and employees, and running his company into the ground, is the very least of what he actually deserved. Who is he that you so defend his right to not suffer the consequences of his actions?

          "God is not on the side of the heavy battalions, but of the best shots."- Voltaire

          by armenia on Thu Mar 27, 2008 at 09:24:38 PM PDT

          [ Parent ]

  •  I'm a financial moron (0+ / 0-)

    and despite the drama even I know this is not exactly the way this shook out. I refer to Scipio's comments for an understandable recap of the bailout. There is enough to be legitimately appalled that our tax dollars are being wasted on without confusing the issue.

  •  Obama wants the Fed to have more power (0+ / 0-)

    Obama is wrong.

    Abolish the Fed let the market determine interest rates.

  •  they used to jump out of windows (2+ / 0-)
    Recommended by:
    gnat, armenia

    Now they've got golden parachutes, and the Fed to protect them.  Oh yeah, and bodyguards.

    I miss the old days.  

    "The great nations have always acted like gangsters, and the small nations like prostitutes." - Stanley Kubrick

    by Inky99 on Thu Mar 27, 2008 at 09:10:27 PM PDT

  •  "hike up his worthless shares" (0+ / 0-)

    He has a fiduciary duty to do exactly that.  The "embittered and dazed employees" along with normal shareholders benefited from the price going up from $2 which was crazy to begin with.  From a quality of life perspective the extra 50M he received probably mattered less than it did to the employees and ordinary shareholders.

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