WOW ...The Big Bad Bear is Dead! I only mean bad because Bear Stearns was so BIG, the Biggest to Fall! I've been watching and listening to Bear Stearns for the past year now knowing that they were the #1 buyer of mortgage backed securities. I remember in the hay day and the peak of the real estate market (2004 - 2005) Bear Stearn was buying everything they could mortgage related. I knew that Bear was in the riskiest position of all the large companies but I didn't think it would come to this.
In order to avoid filing BK they sold out over the weekend to JP Morgan Chase for $2.00 a share. YES that's TWO DOLLARS a share!!! It's stock hit a high early 2007 at over $150 a share. It's 52 week high was $159.36. The stock closed on Friday at $30.00 after losing approximately 50% of it's shares value. THAT IS CRAZY!
This won't help the confidence with the financial markets, banks, brokers, the stock market or the housing market. I would assume we are going to see another large down day on Wall Street Monday.
It's amazing to me that Bear Stearns was able to hide the truth of it's deterioration and then all of a sudden implode to almost nothing in a matter of 2-3 days! At the same time that Bear was being sold for $2.00 per share the FED announced an unexpected and rare weekend .25 basis cut in the discount rate for banks. The FED is being proactive but will it be enough.
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