Bear Stearns

probably...

BSC was the most exposed to these assets. Lehman Brothers also has a relatively large exposure. LEH is off 35%+ today.

 

The lawsuits have begun.

http://www.bloomberg.com/apps/news?pid=20601087&sid=acq_gGTe8JR8&refer=home

 

That's the shitter about this whole thing. No one knows because the rating agencies screwed everyone by letting subprime loans be included in higher rated pools of whole loans or packaged in MBSs with high grades. So, now everyone is sitting and waiting to see if they hit the reverse lotto and see their portfolios blow up. The previous sentence only applies to those companies with no or limited sub prime portfolios. I STILL can't figure out how the rating agencies aren't being made out to be one of the bad guys in this whole thing. They have to be just waiting for the other (lawsuit) shoe to drop.

The rest took gambles and its coming back to bite them in the ass big time because people are being faced with huge resets on properties that are now worth less than their mortgage and they have no equity and they are making the smart decision to walk away with no damage but a hit to their credit reports.

 

Indeed.

Question - If you have negative equity on your house, but have a bunch of other assets ( stocks, cash ), can the bank seize those other assets, or just the house?

 

just the house

 

Just the house. If you bought a home with nothing down in California you may be down a ton. Best off to walk away and rent for 2-3 years, then buy something. Not to mention you can probably stay in your current home for 6-8 months without paying your mortgage.

 

Interesting take on why BSC is currently trading 3x takeover.

Take a loss on the equity portion, make sure the deal goes through and get paid out on the fixed income and swaps.

http://dailybriefing.blogs.fortune.cnn.com/2008/03/18/why-bear-stearns-stock-is-in-orbit/

 

Freaking deal of the century for JPMorgan. Think about it, Bear Stern's Manhattan building is worth about a billion dollars. JP paid what, like $320M for the entire damn company? Best part is the Fed is holding the risky paper. BS had no other choice though and no body would have bought them without the Fed help. Luckily, if the paper goes bad at the Fed, it won't directly hurt the US taxpayer. It will; however, indirectly if the Fed has to give less money back to the US Treasury due to any loses. Risky but ballsy move by the Fed. At least the other brokerages reported good news last week.

The problem is all that bad paper is just sitting there at banks and no one can figure out how to value it now, so there is no market for it.

 

Whackiness

 

Looks like JP is upping the bid to $10. Still a good deal though.