Mike Stathis

JPMorgan, Bear Stearns: More Smoke from Wall Street

fxtrader, you are missing the point behind the inequity of the situation, which raises suspicions as to what's going on at the Fed.

jimmy46, not true at all. I'm saying you have to treat all banks fairly. I think there should be no bailouts. Read my previous artcles and you will see.

Fed Bailout of Wall Street: Not Fair to the Commercial Banks

Nice commentary and great industry insight.

A note: Bear Stearns was not bailed out. In fact, the Fed refused to bail them out but granted unlimited cash to IBs in the future. Bear got a bad deal.

Perhaps we should all be wondering how it was that JPM got such a sweet deal - virtually no risk of loss and the world's most highly coveted clearing and prime brokerage business units from Bear, which I would estimate to be worth in excess of $18 billion.

Either way, both the commercial and IBs come out of this mess with the support of taxpayer dollars, which is debasing the dollar further, causing further inflation and higher oil prices.

I think a better title for your article might be "Fed Bailout of Wall Street Not Fair to Taxpayers."

I regard U.S. banks as the enemy of the American people, both commercial and investment alike. America is now more preoccupied with making interest than making products and the full effects of this disasterous strategy has only begun to surface.

Having worked on Wall Street, I've seen the fraud and corruption. And I left the industry because I did not want to be anywhere near that type of "business."

As a consumer, I have been exploited, lied to, and even had money stolen from me by one very large commerical bank. In fact, as it stands today, the commercial banking industry now joins the ranks of the worst run industries in America, along with the auto and airlines.

Current Financial Crisis Going Into Extra Innings

To be a bit more cut and dry, we have a long way to go; and the direction will be a downward spiral unlike anything ever seen. Pickaroonwyo and SeriousBull are right on track.

Before it's all said and done, this fiasco is going to make the S&L crisis look like a walk in the park. There will be several bank failures. But the Fed will pump money into the system via auctions (collateralized with junk bonds). The FDIC is already beefing its staff up to handle the coming mess.

Banks won't close their doors like in the 1930s. You'll get your cash.
The only problem is that this measure will continue to destroy the dollar. And it's going to result in many many corporate bankruptcies outside of the financial sector.

Don't fall for these sucker rallies. If anything, take the opportunity to set up your short positions.

Credit Market Mayhem and the S&L Crisis: Drawing Parallels

Nice article. And it was especially good of you to point out the leverage firms have dug themselves into, as many still do not realize that virtually every US bank has excessive leverage. The unwinding process is just beginning. Will we see many more situations like Caryle before it's over. I think to compare the current meltdown to the S&L crisis is a huge understatement. Already, the losses due to mortgage-related writeoffs have exceeded $200 billion. Finally, together with the European Central Banking System, the total amount of cash released to banks in less than a year as a result of the subprime debacle is in excess of $1.2 trillion. In order to provide adequate liquidity over the next year, I estimate another $1-$1.5 trillion will be needed in order to keep banks solvent. In total, I am expecting direct losses due to the real estate-banking meltodown of $600-$800 billion.