When Bear Stearns, fifth largest investment bank before the financial crisis, blew up in March 2008, the New York Fed handed it, along with a big bailout package, to JP Morgan Chase for $10 a share – actions that were at “the very edge of its lawful and implied powers,” is how former Fed Chairman Paul Volcker explained the Fed’s deal. But JP Morgan made out like a bandit.
Half a year later, Lehman and AIG kicked the bucket. The shenanigans of Wall Street over the years finally had come home to roost. In the process, the Fed shuffled a still uncertain number of trillions to Wall Street and corporate America, including the likes of GE, whose CEO Jeff Immelt was a director on the board of the New York Fed at the time and was involved in establishing the Commercial Paper Funding Facility that later handed GE $16 billion in bailout funds. And Jamie Dimon, the CEO of JP Morgan Chase, was also a director at the New York Fed when it decided the Bear Stearns deal.
That’s the tragedy of the financial crisis: those responsible for it bailed each other out. While the bailout corruption fest was going on at the New York Fed, $19.2 trillion of US household wealth was wiped out, and 8.8 million people lost their jobs. But the top, those who were responsible for the debacle, they’re now doing better than ever. Among them, the Bear Stearns people. According to the Huffington Post:
Five years later, the executives that were in charge of Bear’s headlong dive into the cesspool of subprime mortgage lending hold similar jobs at the most powerful banks on Wall Street: JPMorgan, Goldman Sachs, Bank of America and Deutsche Bank.
The Huffington Post goes into the details of just how well they’re doing, and who is suing them. But I won’t dissect such aggravating matters, not today.
Instead, I have a hilarious and cynical parody of the Bear Stearns debacle, written for this occasion by Nick Stuart, a musician, poet, DJ, and disgruntled observer in San Francisco.
The Wreck ‘O The Bear
By Nick Stuart
The legend lives on of the great octagon-
shaped tower in midtown Manhattan.
The ghosts tell the tale of the great subprime fail,
and how the mighty Bear Stearns got flattened.
It was the Spring of ‘08, and the economy’s fate
seemed perched on an exuberant bubble.
“Ace” Greenberg sat down, and with an increasing frown,
wondered just how he’d got in such trouble.
The firm of Bear Stearns had a stature well earned
among the Rothschilds, the Barkleys and Barings.
In the gales of ‘29 it had come through just fine,
with neither a layoff nor paring.
“Ace” wanted to work and he’d joined as a clerk
in ‘49 fresh out of college.
He’d risen the ranks, become a wizard of banks,
and now Chairman in his opulent office.
The CEO Cayne hurried in to explain
that rock-like the stock was a fallin’
“The rumors are running all over the Street
that the margins of March are a callin’!
We’re overexposed, all our assets are hosed,
and our toxic junk bonds are all failin’
We’ve just been downgraded by Standard and Poors,
And buddy, we’d better start bailin’!”
“Ace” looked at Jim, and still looking quite grim, said,
“Jimmy, you’ve got to be joking.
If you think this one blip might just sink this great ship,
well, tell me just what the hell you’ve been smoking!
I’ll call Ben at the Fed, tell him we’re in the red,
and can he kindly print us some money
with Tim’s magic machine that just pumps out the green
so fast that it’s almost not funny.”
“Ace” promptly called Ben and some other good men
And said “Fellas, we’re too big to fail now.
So sound the distresses and crank up the presses
‘cuz the Bear needs a serious bail out!”
“I’m sorry,” said Ben, “you’re a really good friend,
but this news is more sad than surprising.
I’m afraid it’s too late—look, your leverage rate
is forty-to-one and still rising!
Now we want to be fair, how ‘bout two bucks a share?”
Replied “Ace,” “Lord, I’m gettin’ a reamin’”
“And I’m sorry,” said Hank, “that you’re walkin’ the plank–
though if it makes you feel better, so’s Lehman.”
The last to chime in was young Treasury Tim,
“Yeah, sorry, Ace, we didn’t mean to screw ya,
but your tower’s been sold, Jeffery Epstein’s on hold,
And he says, uh, he’s lookin’ to sue ya.”
“Ace” hung up the phone, “I’ve been chewed like a bone –
to trust them I must have been dreamin’”.
And so instead of a bailout, a great fire sale
was the fate of Bear Stearns and its schemin’
On Wall Street they tell how it all went to hell,
and how after the Bear many followed.
And their shadow bank ways are still legal today
with Glass-Steagall still hobbled and hollowed.
By Nick Stuart.