There was a noticable dearth of comment surrounding the demise of Bear Stearns in the papers on Monday morning. But then that’s the trouble with late breaking Sunday stories.
The New York Times, for example, has relied on Dealbook to do the talking. Their Deal Professor has a few questions on the Bear Stearns bail-out.
Can Bear’s shareholders stop it? Absolutely. There will be a shareholder vote and Bear’s shareholders can vote no. But there appears to be a unique provision in the merger agreement that Bear is required to re-hold the vote over the course of 12 months if Bear’s shareholders vote no the first time. Only after twelve months of meetings and no votes can the transaction be definitively rejected.
Does that open up some interesting arbitrage opps, he wonders, with Bear given a year to shop for a better offer?
Paul Krugman considers bail-outs generally – clearly writing while the JPM rescue for Bear was still a rumour.
According to late reports on Sunday, JPMorgan Chase will buy Bear for a pittance. That’s an O.K. resolution for this case — but not a model for the much bigger bailout to come. Looking ahead, we probably need something similar to the Resolution Trust Corporation, which took over bankrupt savings and loan institutions and sold off their assets to reimburse taxpayers. And we need it quickly: things are falling apart as you read this.
The Fed’s willingness to engineer the rescue of Bear makes a broader, taxpayer-funded financial bailout seem more likely. Combined with superlow rates, that perception will add to pressure on the already beleaguered dollar. Bear Stearns is the biggest financial firm to hit the wall this time around. But the biggest name in financial distress could eventually be the U.S.
The Times leader, “Bear necessities”
Alistair Darling’s repeated statements about Britain’s “resilience” in last week’s Budget look increasingly naïve. The only way out of this crisis – and the word has rarely been better applied – is for the US authorities, acting in concert with central banks elsewhere, to continue their forthright assault on the panic.
Related links from the FT
Lex – Queasy Street
Wall Street waits from next domino to fall
JPMorgan capitalises on rescue role