Bear Stearns Takes It In The Vault After Conference Call

Bear Stearns president and CEO, Alan Schwartz, was recently noted as saying that the “liquidity position [of the securities firm] has not changed at all” on a recent CNBC appearance. The reaction to the rumors about the firm’s liquidity and ability to fund its business came only a day after the resignation of Bear Stearns Director, Henry S. Bienen.

The stock has been down by over 40% today, and it’s taking everyone down with it. During the conference call, one Bear Stearns executive discussed the reaction of its clients to the rumors.

A lot of people acted to protect themselves from the possibility of the rumors being true. The concerns on the part of counterparties, on the part of customers and lenders got to the point where a lot of people wanted to get cash out.

The Bear Stearns Companies, Inc. Conference Call

More than half the value of Bear Stearns, about $8.9 billion, was wiped out over the last 3 months…about $6 billion in the blink of an eye today. The market obviously reacting to the New York Fed bailout.

JPMorgan is providing secured funding to Bear Stearns for 28 days, and those loans will in essence be insured by the Federal Reserve. Schwartz said this move will help “restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations.” Many market experts believe Bear Stearns will be purchased within the next few days either by JPMorgan or some other bank…or by a foreign entity, which is least likely.

Jimmy Eats Wad
James Cayne, Bear Stearns Chairman, blew his wad of cash (on paper) after today’s tumble. Check this out.

Date	$ Per Share	Value
Jan 12, 2007	$171.51	$992 million
March 14, 2008	$30.00	$166 million

I guess losing $800 million bucks on paper would suck. Heck, I’ll take his $166 million if he doesn’t want it.

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