JPMorgan, Bear Stearns, and Merrill Lynch
Regarding the latest financial disaster, I strongly recommend Caculated Risk as part of today’s entertainment, JPMorgan Conference Call Transcript.
CR quotes part of the following; I have included the complete exchange between Guy and Mike.
Guy Moszkowski – Merrill Lynch – Analyst
Yes, fair enough, no, I’m just thinking about to the extent that you’re anticipating very significant marks on mortgage assets in closing the transaction, how does the — how does that read across to your own holdings of mortgage assets?
Mike Cavanagh – JPMorgan Chase – CFO
Guy, we’re very comfortable with the level at which Bear Stearns had marked the positions, broadly consistent with JPMorgan. Obviously during volatile markets there are differences from asset to asset. But we’re comfortable with the marks. We’re comfortable with the risk exposures that JPMorgan is left with. We think that — well, we know that any merger is fundamentally distracting and the time that we all spend both at JPMorgan and Bear Stearns focusing on merger integration is time that we’re not spending on other things during a time when we all want to be very focused. So really for all those reasons we’re very comfortable both with what we found and what we’ve acquired. But we needed a pretty substantial cushion both for all the direct transaction related expenses, including retention for key people at Bear Stearns that we’ll want to make sure continue to work with us, and to compensate us for both the risk and the opportunity cost in this market.
This exchange is brimming with delicious ironies. JPMorgan’s positions are “broadly consistent” with JPMorgan’s. Of course, key people will be retained; need to keep them. Keep an eye on the sky for golden parachutes. And the Fed is there to play backstop.
Maybe Guy is wondering if ML can pick up JP at bargain prices–with the Fed playing backstop again.