Moscow parade : A Russian policeman plays the trombone
during a St. Patrick's Day parade in central Moscow.
(AFP/Michael Eckels)
Posted on 03/17/2008 11:13:38 AM PDT by NormsRevenge
NEW YORK (Reuters) - Financial firms face a "new world order" after a weekend fire sale of Bear Stearns and the Federal Reserve's first emergency weekend meeting since 1979, research firm CreditSights said in a report on Monday.
More industry consolidation and acquisitions may follow after JPMorgan Chase & Co (JPM.N) on Sunday said it was buying Bear Stearns (BSC.N) for $236 million, or $2 a share, a deep discount from the $30 price on Friday and record share price of about $172 last year.
"Last evening the Bear Stearns situation reached a crescendo, as JPMorgan agreed to acquire the wounded broker for a token amount of $2 per share," CreditSights said. "The reality check is that there are many challenged major banks, brokers, thrifts, finance/mortgage companies, and only a handful of bona fide strong U.S. banks."
CreditSights said it lowered its broker, bank and finance company recommendations to "market weight" due to the credit crisis and stresses in the market.
In the event of future consolidation, potential acquirers identified by CreditSights include JPMorganChase, Wells Fargo, US Bancorp, Goldman Sachs and Bank of America (BAC.N), once it works through its recent agreement to acquire Countrywide Financial Corp, (CFC.N) the largest U.S. mortgage lender.
Possible foreign bank acquirers include HSBC, Barclays and Canadian firms, said CreditSights, which said the Bear Stearns deal should be good for bondholders.
"The debt side whether at the parent level or on the broker/dealer levels seems to be in rather good shape with the capital structure to be assumed by JPMorgan at deal close," which is expected in about 90 days, CreditSights said.
Financial stocks are likely to trade lower but the overall market may begin to stabilize, according to Morgan Stanley's chief U.S. credit analyst.
"I view the stabilization of Bear Stearns coupled with the liquidity action by the Fed as constructive for the proper functioning of the lending system," said Gregory Peters, chief U.S. credit analyst at Morgan Stanley. "Financial stocks will trade lower, but these are important steps in the path of trying to stabilize the credit markets."
Global stocks fell sharply on Monday, and U.S financial stocks tumbled in early trading, led by a 86 percent slump in Bear Stearns. Lehman Brothers (LEH.N) shares sank more than 35 percent.
Financial share prices could fall further by as much as 50 percent, Oppenheimer & Co. analyst Meredith Whitney said.
"As we believe we will begin to see goodwill write downs during the first half of this year, we believe investors will focus more on tangible book value and stocks will quickly revalue to far lower levels," Whitney wrote in a note to clients.
What, were people not paranoid enough yet about the financial system or something?
Where are all the experts around here who predicted the market would have a disasterous crash today?
Oh well, there’s always tomorrow.
a lot of emails on CNBC today along the lines of ‘if the investment banks are too big to be allowed to fail, they’re going to have to accept more regulation.’ That won’t be a popular idea here, but neither is letting these guys take wild swings, and when they fail, letting them walk away with their bonuses. I’d at least like to see some liability—civil and criminal—on the part of top executives and board members.
Here is comes just like the Bible told you.
That is what I am saying. ANd I am not even that religious.
You wouldn't have any relevant links, I'd like to read further about this mess, but can't make heads nor tails of it? Thx
That's pretty deep!
Two words... Merrill Lynch...
Looks like the bears have made a very stern market the order of the day.
People involved in the mortage mess are asking, “What about us?”
cute
Liability? For what? You invest money that is at risk. Since you know little about the matter, you hire management of a corporation to do that for you. If the management acts in good faith, there is no liability for the consequences.
YOu are being revengeful and spiteful when, in the absence of any evidence, you assume that management acted in bad faith.
With anti-capitalist sentiment so high among conservatives, it's no wonder that only socialists are running for presidency.
If the management acts in good faith, there is no liability for the consequences.
1984 (The Party) meets Alien (The Company).
They should make a movie.
He is not supposed to have any sleep or rest because his stock is going down? It's simple, really: the company made a bet of being a niche player in credit markets --- long ago. Accordingly, the company took huge positions in that market. Those positions were accumulated over the last few years. The bet did not pan out. So, he should kill himself? Stop eating? The truth is, over the last year there was little he could do.
If you take any course in organizational behavior/leadership/social psychology, you will be told that is is mandatory for a leader to inspire confidence under all circumstances. That's what presidents do, denying recessions until it is no longer possible; that's what CEOs do. The reason is simple: if you don't, demise becomes a self-fullfilling prophecy. Before you accuse people, Mr. Conservative, acqaint yourself with the duties and obligations of management. Defaming people is hardly conservative (you do subscribe to ten commandments, don't you?)
the CEO said Bear Stearns ‘doesn’t have a have a liquidity problem.’ don’t know if that meets your standard for acting good faith. It doesn’t meet mine.
He said that, at that point in time, the company was capable to meet its obligations. That appears to have been true: the company did function this week, did not it? A week later, he also said that the position deteriorated significantly "over the last 24 hours."
Now which part is not clear to you?
you clearly don’t have a problem with the management of BS. I wonder how many shareholders agree with that analysis. Damned few, I’ll wager.
I completely agree with your assessment. We have now two generations of whiners, raised on the motto "It's not my fault," people for whom it is foreign to take responsibility for their own actions. Average Joe and Jane are trading stocks from work in 1990s and make a ton of money. Then they lose some in 2000 --- well, we have to hang the CEOs!
The same Jane and Joe are flipping condos in Florida and Nevada, and buy the biggest house a ZERO downpayment can buy. Then, when that house goes down in price, they simply walk out --- and the rest of us pay for that irresponsible behavior. But that's not enough -- hang the entire Wall Street!
I agree with your assessment: nowadays, people look outside of themselves for the guilty party -- and both the facts and reason be damned.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.