Bear: No Fat Cat Bailout, No Asset Problem Either

Bear: No Fat Cat Bailout, No Asset Problem Either
Posted Mar 24, 2008 11:12am EDT by Aaron Task in Investing, Recession, Banking
Related: BSC, JPM, ^SPX, ^DJI, ^IXIC, XLF, YAHOO.

Shortly before 10:00 a.m. ET, JPMorgan upset traders hoping to ease back to work after the holiday weekend, but gave bulls another shot in the arm. Jamie Dimon's company also made The New York Times' Andrew Ross Sorkin look very good.

By confirming it will raise its bid for Bear to $10 per share from $2, as Sorkin reported late Sunday, JPMorgan seemed to put a capper on this Wall Street drama.

But still at issue is whether the government took too big a role in the Bear bailout, and whether the Fed and Treasury were guilty of bailing out Wall Street at the expense of Main Street.

As a former policymaker at IMF and Treasury, Mark Dow of Pharo Management, a macro hedge fund with over $2 billion in assets, has a unique view of the Bear saga. His take: The Feds were justifiably worried about "systemic risk" and did the right thing in forcing this shotgun marriage. Monday's resumption of strength in the stock market -- especially the financials -- seems to indicate many traders confer.

Dow also has an unconventional view of what really doomed Bear Stearns, arguing it was the firm's use of leverage, not the quality of its assets, that brought down the once hallowed firm.