Bear Trap

Here’s some breathless reporting about an anonymously authored book. Its an interesting discussion of a senior manager director "running the derivatives desk at Bear."

The whole "anonymous" author goes public in September strikes me as schtick — a book publishing publicity stunt.

However, getting the manuscript is quite the coup for Liz. Any Bear insider
story is worth pursuing, as we still only have partial knowledge of
what really happened, and how things went so wrong.

I love Liz, but if you are going to mention that a firm had $17 Billion in cash, then you have to also mention this capital base was leveraged 35X that amount in liabilities. Its called double entry book keeping for a reason.

One last note — Fox has been stoking the "rumor monger" aspect of the Bear/Lehman story. I am not a believer in this line of thought — rumors cannot bring real companies, and the biggest player in the Residential Mortgage Back Securities sector made a big bad bet that went bust. I am no defender of CNBC, and invariably disagree with Dennis, Charlie and Larry.  To me, the Vanity Fair reportage blaming CNBC was silly, and Fox picking up the same story line — that rumors brought down Bear Stearns — does not serve its viewers. Its old school yellow journalism at its finest.

Regardless, this will be worth watching to see what develops…




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What's been said:

Discussions found on the web:
  1. anon commented on Aug 3

    you mean someone actually watched Faux Business Channel?

  2. GB commented on Aug 3

    I remember reading in June of 07 that BSC had the most CDO’s tied to subprime and ARMS because they got in late to the whole derivative mortgage game. That’s when I bought PUTs for Jan08.

    I smell Ruport Murdoch on this one trying to be pro-American or something. They should do business special on being fiscally responsible. Hopefully this book will also show the negative sides of Bear’s operations too. I’d like to see just how bad they are/were.

  3. Dervin commented on Aug 3

    Oh, dear God. It sounded like they were going over a tell all book about the Brad Pitt/Jennifer Aniston breakup.

    You had to love the way they kept on taking this guy at his word. It’s only a matter of time before we get (it’s not registered yet) and the wall street version of loose change.

    Look here’s 17 dollars, now watch as I put 595 dollars on top of it. Notice how it doesn’t collapse. This is the first time in history that debt brought down a company.

  4. Eric commented on Aug 4

    There’s a lot of that yellow journalism going around. Anyone else notice how TSCM is trying to position Cramer, one year after his rant, as the **one guy** who had the credit mess figured out before anyone else? Now if you’ll excuse me, I’ve got to go get the latest insight into derivatives from former Major Leaguer Lenny Dykstra.

  5. karen commented on Aug 4

    “Faux Business Channel”, thank you for that. I couldn’t even finish the clip… what crap.

    Why so much attention on Bear puts vs airlines pre 9-11?

    Another government orchestrated distraction…

  6. Kimo commented on Aug 4

    Loose your job, and your company stock. Who do you call? GHOST PUBLISHERS!

  7. Jim commented on Aug 4

    LOL @ Kimo. You got me singing da song.

  8. Anonymouse commented on Aug 4

    These two retards need to go back to the gossip columns… shameful.

    If you can stomach watching to the end you hear her say, “We weren’t able to use too many quotes because there’s a confidentiality agreement slapped all over this thing.”

    Suggesting that their ‘exclusive’ wasn’t something Fox dug up themselves, but rather a promotional deal that the publisher cut with them.

    Of course it’s Faux… and no standards apply. But for the record, rumors will lose their power once companies start consistently telling the truth about their financial position, instead of managing earnings, manipulating when orders are booked, putting liabilities in SIVs, marking to fantasy-model, etc, etc

    In theory regulators, journalists and the market would keep companies in line. Instead the regulators are compromised, the journalists are cheerleaders or too stupid to figure it out and the market is all too willing to play along as long as prices look like they’re going up.

    Then suddenly the music stops… and everyone tries to jump on the last remaining chair.

  9. FinanceFreak commented on Aug 4

    Sounds like all she did was report something she got. I saw her reports and she challenged stuff the authors were saying. who cares? It’s a book on Bear Stearns that’s coming out. I kinda see that as newsworthy. I’m liking Fox Business more because if you wanna talk yellow journalism, try CNBC on a daily basis.

  10. Peel the Onion commented on Aug 4

    Yep, I agree. I think there are so many sides to the Bear Story that this is just one of them. I bought it on Amazon after I saw the Fox report. I’m not close-minded and I didn’t get the sense Fox was either.

  11. pjfny commented on Aug 4

    anonymous??? How many heads of derivatives (senior man. dir) did they have at bsc.

    Once the dirty secret that gs/pimco stopped doing novations with bsc, and customers started to slowly pull credit exposure to bsc (hedge funds and brokeage customer)was out, it was all over.
    I wonder if anonymous, is going to write about how bsc management levered up to 40:1 while buying illiquid assets with questionable quality.

  12. CatFight! commented on Aug 4

    Cat fight between Alexis Glick and Liz Claman!

    Yeow! I’ll pay good money to see that one.

    Thanks for the post. . .

  13. BizGuy commented on Aug 4

    Well, well well, what is this? Suddenly Bear Stearns isn’t news unless the Today Show decides it is? This Anonymous guy may be completely off his rocker but if he was there, I want to hear what he said.

  14. MM commented on Aug 4

    You made me actually look at that clip.

    I think you were being kind by describing it as Yellow Journalism.

    This is the most simple-minded segment that does everything possible to make a flimsy book with no new facts into some sort of explosive story. They should have known better: they were probably given the manuscript from the publisher; the trading they mention is hardly a conspiracy, especially if–as Glick suggests–the prime brokerage clients were the ones pulling their accounts and shorting the stocks; and the LTCM excuse has been used by everyone for why Bear had no friends but I think that’s a canard. LTCM is an easy story to describe all of Bear’s behavior for many years, not that one event.

    I love how the hierarchy of crimes in the manuscript is insider trading or, much worse, rumor mongering. Isn’t that backwards?

    Finally, your second post says that Clayman says they ran segments later with comments from others. That’s not the same as running a neutral commentary alongside that gasping couch grope. You’re right, it’s like a bad porn set up on that couch. I could hear both Glick and Clayman biting their lips and moaning.

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