Throckmorton
Lifer
- Aug 23, 2007
- 16,829
- 3
- 0
How in the hell could any investing bank ever get involved in the subprime mess is beyond me, a lot of those loans were of the "no-doc" variety, pure garbage...
Miramonti
Lifer
- Aug 26, 2000
- 28,653
- 100
- 106
I don't have any sympathy...but then again I do...
A sale at $2 was basically forced by the fed but wasn't needed. All Bear needed was a huge loan from the feds (which banks have gotten and institutions have been clamoring for for a long time.) Instead, the fed essentially forced the sale of Bear, but then later that night had the nerve to tell other institutions that they'll lend them billions to help prevent their collapse.
And additionally to loans, they covered JPM's back for taking Bear at $2 with $30b of free money at the same time....that is fvcked up. There was no reason to sell Bear at all if the fed was going to offer socialism to everyone else after they buried Bear.
A sale at $2 was basically forced by the fed but wasn't needed. All Bear needed was a huge loan from the feds (which banks have gotten and institutions have been clamoring for for a long time.) Instead, the fed essentially forced the sale of Bear, but then later that night had the nerve to tell other institutions that they'll lend them billions to help prevent their collapse.
And additionally to loans, they covered JPM's back for taking Bear at $2 with $30b of free money at the same time....that is fvcked up. There was no reason to sell Bear at all if the fed was going to offer socialism to everyone else after they buried Bear.
I probably can't, this isn't easy stuff, but here is my crack at it. Please let me know where I have flawed logic, because I am curious to understand this better:
So banks have all these sub-prime loans sitting around and start to worry a little bit and don?t want to assume such a risk, so they call up Bear Stearns to unload the loans. BS creates a new investment vehicle (collateralized debt obligations) to sell to investors that is backed (collateral) by these sub-prime loans. Bear Stearns promises to pay back a return AS THE LOANS ARE PAID OFF. They set these investments up as tranches, with the loans with the least risk being noted as AAA and paying the least return, so on down the line. Bear Stearns figured if any would fail, it would only be the junk ones, not the majority of even the AAA rated investments. They then sell these CDOs to investors. So at this point, their liability is to the banks who they bought the loans from and their assets are their CDOs that they offered to investors. As the loans default, the investors are holding bonds that are essentially worthless, since the collateral they are backed with, sub-prime loans, have defaulted. BS is left owing billions of dollars to the banks without getting any money back from their investors.
If I were him I'd put the measly $61M in a high interest savings account, live on the interest, and STFU.
i dont care about him . i sympathize for the investors and vested employees (some of them, anyway)
Bear would have been just fine had it been able to tap liquidity lines. It was a run on the bank, pure and simple.
Those who say that if they had 61million, they would put it in a high interest savings account and live off the interest will never have 61million short of hitting the lottery.
The ultra rich didn't get that way by aiming and settling for creature comforts or they could have stopped much earlier.
The ultra rich didn't get that way by aiming and settling for creature comforts or they could have stopped much earlier.
Obviously one will never amass $61 million by investing in savings accounts, but after one has already accumulated that much wealth via riskier and more ambitions means, and is now in a different stage in life, is it such a bad idea to hold your money in safe investments and live off of the proceeds?
This thread just shows the ignorance of the masses on the situation.
I for one sort of do feel sorry. The guy amassed $1 billion over his lifetime only to see it dwindle to $61 million in a week.
I for one sort of do feel sorry. The guy amassed $1 billion over his lifetime only to see it dwindle to $61 million in a week.
sandorski
No Lifer
- Oct 10, 1999
- 70,677
- 6,250
- 126
I don't feel bad for him or a number of reasons:
1) He still has >$60 million. Sure it's not $1 billion, but he'll never starve or be wanting any necessities
2) He is a "victim" of his own decisions. Perhaps circumstances conspired against him somewhat, but his job was mainly to foresee such things and to guide his Corp through them.
1) He still has >$60 million. Sure it's not $1 billion, but he'll never starve or be wanting any necessities
2) He is a "victim" of his own decisions. Perhaps circumstances conspired against him somewhat, but his job was mainly to foresee such things and to guide his Corp through them.
TRENDING THREADS
-
Discussion Zen 5 Speculation (EPYC Turin and Strix Point/Granite Ridge - Ryzen 9000)- Started by DisEnchantment
- Replies: 25K
-
Discussion Intel Meteor, Arrow, Lunar & Panther Lakes Discussion Threads
- Started by Tigerick
- Replies: 21K
-
Discussion Intel current and future Lakes & Rapids thread- Started by TheF34RChannel
- Replies: 23K
-
-
Facebook
Twitter