Bear Stearns – Sometimes Losing A Client Is A Good Thing
I guess the music’s stopped for Bear Stearns.
Good to see these highly paid guys, including Jimmy Cayne, working on the weekends, earning their millions.
The purchase of Bear Stearns by JP Morgan is a good thing for Deloitte and a pretty big deal for PwC. That’s because Deloitte loses a client, a problem client, a client they will probably be tied up with in lawsuits for a long time.
But at least Deloitte draws a bright line under their liability.
PwC inherits the problem child in the Bear Stearns business as external auditor to JP Morgan Chase. However, PwC is doing well on making their existing banking clients bigger and therefore driving more fees. They picked up a bigger Bank of America earlier this year when they acquired the Chicago based La Salle Bank. Deloitte looks to stay in the lead to remain as auditor for the rest of the larger RBS-ABN AMRO combination with Fortis and Santander.
Next question is, “Who is going to buy JPM for $2 a share, and LEH and MER, etc. etc? Or better yet, is there anybody left who can?”
Stay below the FDIC limit 😉
-bsmup
I think the Bear Stearns deal gets totally reworked. And, now that the Fed has opened the window, the only issue that probably matters now is the value of the dollar.
Certainly the BSC lawsuits are already flying around. The question is whether bad accounting, bad decisions, or real events caused the meltdown at BSC. Seems to me that the BSC business model was highly speculative and leveraged (30 to 1 on equity) and relied on the confidence level of counterparties. Unless there is something horribly wrong in the 10-K or a fraud is detected, I don’t see much auditor exposure. But I do see a lot of lawyers getting involved in this mess, and the audit firms will be producing mass quantities of documents for years to come.
Final Four Guy
There are no more deals to be made regarding BSC. $2 was paid to keep the deal from bankruptcy which forces all of BSC’s off balance sheet shenanigans out in the open. It’s a last ditch effort to save the other banks and IB’s from the same fate. It won’t work. BSC has 3 or 4 clones out there in the same situation.
Regarding the Fed opening the window. The Fed has opened every window, door, doggy-door and vent in the entire house. Liquidity is not the issue, it’s trust.
bsmup