Source: Bloomberg
Cohan: “We Should Have Let Bear Stearns Go”
November 5, 2015 6:30am by Barry Ritholtz
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Of course he is correct. However JP Morgan Chase would have taken a huge hit given its huge counter party exposure to BSC.
They could have handled it. 4 trillion of assets(real assets) against a bunch of notional costs is a lot. It would have shaken the system
VennData: We should have let George W Bush and his Ownership Society Go.
Defense Department paid for those patriotic displays at ballgames.
“… the Pentagon still cannot fully account for its past spending….”
http://www.nbcnews.com/news/us-news/paid-patriotism-senators-accuse-military-wasteful-sports-tributes-n457246
Kind of reminds me of Y2K when pundits and similar know-it-alls claimed it could have been handled easily or was overblown because nothing happened.
Bear Stearns was just the tip of an iceberg:
Did Bernanke (And Crew) Save The World?
Save the world” is awfully dramatic, but indeed the buzz by those defending Bernanke has been that this moment was like September, 1932, when the rolling international financial collapse …hit the US shores hard, and the Fed did nothing, …
…the most crucial action was not TARP or the AIG bailout. It was the decision on September 18, 2008 to open swap lines to foreign central banks, especially the ECB, which were under heavy pressure and facing a complete freeze of their financial markets due to a plunging euro and lack of dollars. …by December this had amounted to $580 billion, leading to eurojunk sitting on the Fed balance sheet. …
If Bernanke and crew saved the world, this was the moment, and the parallel with 1932 is precisely that it involved the world economy and financial system. …
Financial institutions are different, they are all too interconnected. You just can’t let them go because of the ripple effects. You need to protect the institutions first and then dismantle them in an orderly manner. But in that process it is critical to penalize stockholders and bondholders while protecting depositors. In the case of Bear Stearns, shareholders were penalized but bondholders were not. The cases of GS and MS were obscene as both institutions were converted into bank holding companies overnight and funded by Fed protecting both shareholders and bondholders. It is unbelievable that in both cases, no bondholder, shareholder or member of the management team has lost a penny in the process.