Countrywide, Bear Stearns: Failures in Governance

•  
  SPelch03/26/08 Report as spam
  1

  unbelievable!

  I am absolutely disgusted with government bailouts due to bad management, and in some cases, possibly criminal actions, by corporate officers and business leaders!
  
  Yes, NOT having the bail out will be hard for some people, yes, it may tinge the economy unfavorably- for a while...however- is that NOT what the US is all about? Are we not (allegedly) a capitalist society? should the market NOT bear these issues? What happens when you or I screw up our little self owned businesses? Do we have a 1-800 number to call and say.."Help Big Saviour Government..bail us out...help help help" Um...NOOOOOO! We lose our shirts, file bankruptcy...and pull ourselves up by our bootstraps and manage to salvage our lives...and self respect...because WE did it. When Government "bails out" these parasites...(oh yes they are!) all it does is encourage MORE bad behaviour! After all, if they know the gov't is going to be their safety net, where is the encouragement to act responsibly in the future? What keeps other CEO's from behaving in such irresponsible matters? NOTHING...it's like dealing with children...when the 3 year old has the temper tantrum and you give in and let them have that cookie...they have learned they will always get the cookie if all they do is behave badly. I'm tired of our tax dollars buying cookies for these infantile, immature, irresponsible, criminal CEO-3 year olds. The real shame, is the majority of "the public" is so disinterested and so self absorbed, they don't pay attention to what's going on, until it's too damned late. Why do you think Democrats keep getting elected? It's not because their principles are sound...it's because the sheep that elect them take them at their word and don't do the leg work to discover what they really mean....wise up people...this is YOUR money!!!

•  
  RickSchultz03/26/08 Report as spam
  2

  Not a bailout

  Bear Stearns was not bailed out. If they had been, they'd still be in business. They aren't. Shareholders (about 30% being employees, I'm told) got cleaned out. Lots of moral hazard there, so let's not get so exercised.
  
  The government is guaranteeing loans by JP Morgan to cover the acquisition of Bear's 'assets'. Failure to step up by the government could easily have led to a global depression; you'd feel that a hell of a lot more than the money fronted by the government to support JP Morgan's actions.

•  
  CNKissee03/26/08 Report as spam
  3

  RE: Countrywide, Bear Stearns: Failures in Governance

  Seems what's missing is accountabilty.
  
  CK

•  
  ingoodcompany03/26/08 Report as spam
  4

  Scale and Linkages

  There's an old banking adage, roughly this: "If you're behind in your payments $10,000 you're a deadbeat debtor. If you're behind in your payments $10,000,000 you're a valued partner."
  
  Donald Trump understood well that once you're in as deep as he was, the banks couldn't afford to let him go broke. He wrote, "One thing I learned from all this: Sometimes the best thing you can do is just let things ride, let time go by. There were moments when I felt bored, useless, like my hands were tied. I wanted to do something! But the truth was, a lot of the negotiating that took place didn't really have much to do with me. It more involved huge conference rooms of midlevel bankers quibbling over millions of dollars of secured and unsecured debt. They could certainly do this without me. It was mainly out of my control."
  
  Source: http://www.nytimes.com/books/first/t/trump-comeback.html
  
  Not only the execs at Bear & Stearns, but the Fed also realized that what we're seeing is a far bigger game than Joe Blow's 401k or the balloon payment on Cousin Vinny's home in SanDiego. It is virtually out of the control of Wall Street firms, bigger than anything Trump ever wrestled with. We're seeing solid evidence that U.S. economy still moves world markets, and can turn them on a dime. This mortgage crisis has become less about the money in the sub prime mortgage markets than it is about world confidence in the system of U.S. money management.
  
  Bear & Stearns is for all intents and purposes gone. Exactly the opposite of a bailout, it has paid in full the wages of its sins. The big question is who is next, and how many of these errant firms can be absorbed into the financial landscape before the whole thing collapses under the weight of multiple failures. The world is holding its breath waiting to see how this unfolds. Everyone's placing short term bets, which only increases instability. The Fed is desperately trying to incentivize investors to think long term again (at least what will pass for long term these days).
  
  This is far, far more than a government bailout with taxpayer money. This is an attempt to get the adrenaline needle into the heart of the financial markets.