If there were other institutions that were willing to step up and commit to a deal on such short notice, why haven’t any of them piped up and said so? At least a couple of other institutions had brief discussions with the Fed about stepping in, but backed off (reportedly they only wanted certain plum pieces of Bear).
The senior execs of every financial institution on the planet that’s even a tenth of the size needed to handle an acquisition like this knew full well by Friday morning that the Fed was seeking a buyer to do an emergency deal to rescue Bear. It’s not like any of them don’t know how to contact the Fed to express interest. Some of them certainly did put in inquiries, but nobody offered to do a deal involving the whole Bear Stearns entity, to be publicly announced by 8PM Sunday evening, which was the absolute time limit. There simply wasn’t time to entertain complicated bids that involved parceling off different pieces of Bear, taking multiple bids for each part, parceling out liability for corporate level actions to part-buyers, etc.
Nobody should be complaining about the Fed’s deal with JPM. It was the only deal available, and it had to be done, because 99.9% of Americans don’t want to have their financial security devastated in hopes that it will bring about some ideologically pure financial system.
There ought to be a LOT more focus on how Bear got itself into this condition in the first place. The plan to give the Fed some regulatory authority over broker-dealers is a step towards preventing a repeat of this. But all the senior executives and board members of Bear Stearns should be under intense criminal investigation right now. At the very least, there was a lot of gross negligence on their part. These schmoozing, golfing, bridge-playing big-wigs only understand one punishment, and that’s getting locked up. The message needs to be sent loud and clear that if you negligently cause the failure of a large financial institution to a degree that puts other institutions and whole countries’ economies at risk, that you can’t assume the worst that will happen is you get fired and lose the value of your stock and stock options. The prospect of playing golf/bridge full time instead of just half the time isn’t scary enough to curb their misdeeds.
We are trading “security” for freedom. And I ask - how much security is there in a devaluing, paper dollar ?