{"id":2787,"date":"2008-03-16T23:44:13","date_gmt":"2008-03-17T06:44:13","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=2787"},"modified":"2008-03-16T23:59:22","modified_gmt":"2008-03-17T06:59:22","slug":"bear-stearns-employees-wake-up-to-tenuous-employment-prospects","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2787\/bear-stearns-employees-wake-up-to-tenuous-employment-prospects\/","title":{"rendered":"Bear Stearns Employees Wake Up To Tenuous Employment Prospects"},"content":{"rendered":"

Bear Stearns employees will wake up on St. Patrick’s Day and wonder about their future. JP Morgan Chase bought Bear Stearns, a venerable Wall Street institution, for about 2.5% of the firm’s stated book value.<\/a> The sales price was just 20% of the value of the Manhattan headquarters alone.<\/p>\n

How safe are the jobs at Bear Stearns?<\/strong><\/p>\n

Jamie Dimon, JP Morgan’s CEO, cut his teeth in the brokerage and banking business under Wall Street legend Sandy Weill<\/a>. He rose with Sandy as Weill made his comeback move after being ousted as American Express’ Chairman. Weill took control of Primerica and leveraged it through acquisitions of Shearson Lehman (bought from his nemesis, American Express), Travelers Insurance and ultimately Citigroup. Weill, and protege Dimon, were able to build the empire through cost-cutting<\/a> in the name of economies of scale.<\/p>\n

That doesn’t bode well for Bear Stearns’ employees.<\/strong><\/p>\n

Like the Countrywide\/ B of A merger<\/a>, we have a culture clash ahead. Bear Stearns vertically integrated into the mortgage industry, eventually owning its own wholesale lending channel. Bear violated the “Chinese Wall” securities brokerage firms try to respect; they bought their customers. JP Morgan owns Chase bank, a VERY conservative bank that owns a mortgage operation. The bean counters just bought the cowboys and in this era of “fiscal responsibility”, the cowboys will be kicked off the range.<\/p>\n

Jamie Dimon doesn’t own a ten gallon hat.<\/strong><\/p>\n

JP Morgan bought Bear for its brokerage operations not its mortgage banking business. The $82 discount to stated book value suggests that JP Morgan will keep the prime performing mortgages, for its Chase Manhattan Mortgage portfolio, and most likely rid itself of all other mortgage assets. They can afford a helluva lot of losses on those mortgage assets with the discount they got.<\/p>\n

What’s that mean to the mortgage market?<\/strong><\/p>\n

Less liquidity. While Bear Stearns Mortgage was reinventing itself to be a conservative lender, they were aggressively pricing their loans. Less liquidity and elimination of the price leader means higher costs, long-term.<\/p>\n

Like their Countrywide cousins, Bear Stearns Mortgage employees Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Bear Stearns employees will wake up on St. Patrick’s Day and wonder about their future. JP Morgan Chase bought Bear Stearns, a venerable Wall Street institution, for about 2.5% of the firm’s stated book value. The sales price was just 20% of the value of the Manhattan headquarters alone. How safe are the jobs at […]<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[26],"tags":[],"class_list":{"0":"post-2787","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-lending","8":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":2792,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2792\/stealing-bear-stearns-joe-lewis-aint-pulling-punches\/","url_meta":{"origin":2787,"position":0},"title":"Stealing Bear Stearns: Joe Lewis Ain’t Pulling Punches","author":"Brian Brady","date":"March 17, 2008","format":false,"excerpt":"Joe Lewis taught us all what the word \"derisory\" meant today when he described the Bear Stearns sale to JP Morgan Chase. Lewis doubts the shareholders will approve the sale to Jamie Dimon's financial services powerhouse. Joe Lewis invested some 9 figures in the cash-strapped investment bank, last year. Bear\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2824,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2824\/jp-morgan-ups-bid-for-bear-stearns\/","url_meta":{"origin":2787,"position":1},"title":"JP Morgan Ups Bid For Bear Stearns","author":"Brian Brady","date":"March 23, 2008","format":false,"excerpt":"Have we reached the bottom of the credit crisis? Not likely but we are definitely going through, what Barry Johnson calls, price discovery. From The New York Times via Yahoo News: JPMorgan Chase & Co (JPM.N) is in talks to increase its offer for Bear Stearns CosBear Stearns, (BSC.N) to\u2026","rel":"","context":"In "Investment"","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":5435,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/5435\/tin-foil-hats-optional\/","url_meta":{"origin":2787,"position":2},"title":"Tin Foil Hats Optional","author":"Sean Purcell","date":"November 5, 2008","format":false,"excerpt":"In an earlier post I laid out how my distrust of conspiracy theories is being severely challenged by our government and what appears to be a naked power grab.\u00a0 I am loath to continue in this vein for fear of being labeled the nut job who writes about Area 51\u2026","rel":"","context":"In "Big Mother"","block_context":{"text":"Big Mother","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/big-mother\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1141,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1141\/countrywide-lendingtree-bear-stearns\/","url_meta":{"origin":2787,"position":3},"title":"Countrywide, LendingTree and Bear Stearns Mortgage","author":"Doug Quance","date":"March 13, 2007","format":false,"excerpt":"The lending roller coaster is just starting to roll Most real estate professionals have to deal with an occasional unexpected consequence involving lenders... but not a string of them like this revelation. A client of mine decided to be a generous friend. He's not a wealthy man in the strictest\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1555,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1555\/subprime-lending-fallout-goes-upstream-to-take-down-two-major-hedge-funds-what-does-this-mean-to-real-estate-investors\/","url_meta":{"origin":2787,"position":4},"title":"Subprime Lending Fallout Goes Upstream to Take Down Two Major Hedge Funds: What does this Mean To Real Estate Investors?","author":"Cooksquared","date":"June 20, 2007","format":false,"excerpt":"Two major Bear Stearns Hedge Funds face foreclosure due to their significant exposure to the subprime lending market. 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Based on the very\u2026","rel":"","context":"In "Blogging"","block_context":{"text":"Blogging","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blogging\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":4576,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4576\/what-happened-fannie-mae-and-freddie-mac-exploded-and-many-bystanders-were-injured-in-the-blast-some-fatally\/","url_meta":{"origin":2787,"position":5},"title":"What happened? “Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally”","author":"Greg Swann","date":"September 22, 2008","format":false,"excerpt":"Things fall apart: Kevin Hassett at Bloomberg.com is getting death threats over this news analysis:The financial crisis of the past year has provided a number of surprising twists and turns, and from Bear Stearns Cos. to American International Group Inc., ambiguity has been a big part of the story. 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