Click here to watch CNBC’s Charlie Gasparino (at about the 45 second mark) say that he has some insight from Jamie Dimon and other JP Morgan officials that they feel “buyer’s remorse” over the Bear Stearns deal. Really!?!
According to Charlie, Dimon et al feel the marks on the Bear Stearns assets were “wrong” ... “overestimated” ... “weren’t conservative enough.”
HMMMMM!?! That’s not what Bernanke and the Fed suggested when they did the deal! That’s not what Blackrock must have certified to in the assessment that the Fed paid them to do. Since March, I haven’t heard Bernanke suggest anything other than the marks were accurate. Bernanke acknowledged that the assets had declined since March, but I got the sense that had to do with further deterioration in the credit markets following the inception of Maiden Lane, not that the original marks were “wrong”, “overestimated” or “weren’t conservative enough”. It’s one or the other folks. Pick one.
Yeah, I know that from March until June 30th, Maiden Lane supposedly magically lost the $1.15 billion that JP Morgan had to eat. But hey, Dimon should just believe what Bernanke told Congress on April 3 that the Fed has “reasonable comfort that if we can sell these assets over a period of time that we will recover principal and interest for the American taxpayer.”
So if Gasparino’s comments are entirely about that first $1.15 billion, this post is an embarrassment for just repeating what someone like Gasparino says and I apologize for that.
However, if JPMorgan’s investment in Bear Stearns wasn’t worth the $1.1 billion (at $10 per share) plus the $1.15 billion it has to cover of Maiden Lane’s losses over the next few years of runoffs, then we have another situation altogether.
If those comments that Gasparino attributed to Dimon are a current opinion of the Bear Stearns assets, then we should see some writedowns for the losses that Gasparino mentioned. We should either see those writedowns on JPMorgan’s books or on Maiden Lane’s books, depending upon what Dimon supposedly meant when he supposedly said what he said.
Buyer’s remorse sucks… for JPM and for the taxpayers who are going to have to eat far more than Dimon and his crew.
This article has 3 comments:
Now it appears that Paulson and Bernanke may at last draw the line with Lehman and let the cards fall where they should. We will just have to wait and see. And of course there are many others coming down the track, WM, Merrill, AIG and maybe citigroup. Boy this is going to get interesting.