Wall $treet Folly

Henry Blodget's got a new blog: Clusterstock

Seems like it's been around for many weeks, but Henry Blodget is editing a new blog called Clusterstock:

We're yet another site focused on the financial markets. We offer proprietary and third-party analysis, financial models, news, commentary, and aggregation. We're edited by Henry Blodget (yes that Henry Blodget). Henry is a former top-ranked Wall Street stock analyst who was later keelhauled by Eliot Spitzer (yes, that Eliot Spitzer).

We're in beta now, which means we still suck. We're working hard, though, and we hope to get better fast....

One of today's posts:  a Bear Stearns first year banker tells them that he's  not chilling out at the gym....

Bear Stearns chief vs Fed chief: Barbara Walters seems to have never met an Alan she didn't like

According to Page Six, Barbara Walters, who recently published her kiss and tell memoirs, may be stinging from some of the criticisms over her affair with then-married Senator Edward Brooke.  But more interestingly is what a playa she was, also carrying on simultaneously with Bear Stearns CEO Alan "Ace" Greenberg, and then-future Fed chief Alan Greenpan. And her housekeeper couldn't tell the two Alans apart:

"Audition" also reveals that after breaking up with Brooke, Walters continued seeing Greenberg while also dating Alan Greenspan, the future Federal Reserve chairman.

Her Latina housekeeper couldn't keep the two Alans straight. "When they gave me the message, I could only ask, which one talked louder?" Walters wrote. "Alan Greenberg . . . talked in a normal tone of voice. Alan Greenspan was very soft-spoken. He almost whispered. And that's how I would know whether it was Greenspan or Greenberg."

Barbara Starts To Feel Heat - Page Six NY Post

JP Morgan's $6 billion Bear Stearns reserve proving to be too low so far

It's more like $9 billion so far, but could end up plus or minus another billion....

JPMorgan Chase is to take a charge of about $9bn – half as much again as its estimate – to clean up Bear Stearns’ balance sheet and pay for redundancies and litigation arising from its cut-price takeover of the stricken investment bank.

Jamie Dimon, JPMorgan’s chairman and chief executive, told a banking conference organised by UBS that the higher costs were driven by the losses suffered by Bear this year and the larger-than-expected amount of bad assets on its books.

Mr Dimon said he remained optimistic on the long-term benefits of the $1.5bn takeover of Bear but described it as “mission not accomplished”, arguing saying that the success of the deal would have to be judged in future years.

On Monday, Mr Dimon said the $9bn charge, which includes Bear’s most recent losses that were not contained in the original estimate, could end up being up to $1bn higher or lower.

JPMorgan faces $9bn charge for Bear clean-up - Financial Times

Was Bear Stearns' CEO's party invitation lost in the mail?

Or was Alan Schwartz just plain dissed at a luncheon hosted by Ben Bernanke and attended by most every other Wall Street BSD?  Or maybe he was invited and was just too busy trying to put out fires on the home front.  In any case, Bernanke hosted one hellofa gathering (click on picture to enlarge)....

Federal Reserve Chairman Ben S. Bernanke lunched on March 11 with a Who's Who of Wall Street leaders, including JPMorgan Chase & Co.'s Jamie Dimon, three days before the central bank rescued Bear Stearns Cos. from bankruptcy.

Other guests included Goldman Sachs Group Inc. Chief Executive Lloyd Blankfein, Lehman Brothers Holdings Inc. CEO Richard Fuld, Morgan Stanley President James Gorman, Citigroup Inc.'s Robert Rubin, Blackstone Group CEO Stephen Schwarzman and Merrill Lynch & Co. CEO John Thain. Alan Schwartz, the CEO of Bear Stearns, was not listed among the attendees.

Jamie Dimon proclaims the credit crunch is nearly over....

But the U.S. recession is "just beginning" and that there's a one out of three chance that this one could be as bad as the early 1980's.  He also commented on how the Bear Stearns merger is going.  The firm lost  "several billion dollars since March 17", the announcement date of the merger....

At an investor conference Monday, Mr. Dimon referred to the merger with Bear Stearns -- a highly-watched deal set to close around June 1 -- as "mission: not accomplished." Mr. Dimon said the entire merger process will last through 2009, but provided a number of indications that the New York bank is well on its way.

Although the deal remains some weeks from closing, Mr. Dimon said J.P. Morgan has already found new job positions for 40% of Bear Stearns staffers, even as Wall Street endures heavy rounds of layoffs. Mr. Dimon reiterated previous comments that the remaining Bear Stearns employees will know their fates by the time the merger closes.

Dimon: Credit Crunch Nearly Over - Wall Street Journal

What some Bear employees are doing until they're actually fired

How some are coping: Since JP Morgan can notify Bear Stearns employees that they'll soon have no jobs but can't actually fire them until the merger is done, they still get paid.  To do essentially nothing.  So while many are no doubt beating the bushes for new jobs, NY Magazine reports that some are chilling at spas and working out at the gym....

“I’d say 50 percent of my department comes in at some point on a given day, and the trading floor is empty,” says one of the thousands of doomed employees who’ll receive full pay until JPMorgan Chase takes over next month. The paychecks keep coming thanks to a convenient technicality: “We’re informing people every day,” says JPMorgan spokesman Joe Evangelisti....Laid-off bankers will receive at least three weeks of severance for every year served, plus a bonus for sticking around till the sale closes. For now, they’re becoming spa swans and gym rats. “I take one call a week, maybe,” says the Bear employee. “Sometimes I have to, like, print something.”

Bear Bankers Hibernate With Pay -- Until they get laid off. - NY Magazine

Bad blood at the Bear: Ace Greenberg vs Jimmy Cayne; We can't wait for the book....

Both yesterday and today we had major internet problems that have prevented  us from posting. As a result, this one, on the nasty feud between Ace Greenberg and Jimmy Cayne goes up a day late.  But we already had the artwork ready to go, so.... 

By now you all must have read  the great article in yesterday morning's NY Times on the icy relations between Bear Stearns' Ace Greenberg and Jimmy Cayne. A telling contrast between two men. Even after the Bear Stearns implosion, Ace still command a tremendous amount of respect and loyalty from current and former Bear Stearns employees; And he's "very happy" that he's got a nice new job with new parent JP Morgan as vice chairman emeritus (and no doubt, chief resident magician). Jimmy on the other hand, only commands contempt and disdain these days, for his fiddle-with-his-golf-clubs and bridge tournaments while Bear burned attitude.  And as for a job, got bupkus. He's keeping a low profile  these days.

“I walk around with a horrible, horrible heavy heart each day,” Mr. Cayne has told friends. “It’s a severity of pain that cannot be measured, because you can’t measure the pain of 14,000 families.”

JP Morgan could swallow Bear Stearns by May 29

JP Morgan's firesale purchase of Bear Stearns could be completed "within hours" of the May 29 vote according to Reuters sources....

Good Karma: Alan "Ace" Greenberg is helping out some of the lowest paid Bear Stearns workers with cash gifts

As thousands of Bear Stearns workers have gotten or will soon get pink slips as the firm merges with JP Morgan, former CEO Ace Greenberg is giving 25 of the firms lowest paid workers at least a small helping hand.  According to the New York Times, he's giving them a total of $360K --  $200 a month over a six year period.  Those getting the dough include some from the mailroom as well as clerical employee.  Several have physical or mental handicaps.  In a letter to the employees, he said:

"This is a personal gift, from me to you, and with it, I give my personal thanks."

Gift to the Mailroom, From the Boardroom - NY Times

Revolving door: Goldman Mortgage chief leaving; JP Morgan offers Bear Fixed Income head $27 million package; Merrill's Sobotka may leave firm

• Goldman Mortgage Chief Sparks to Leave After 19 Years
• JP Morgan offers Bear's Mayer $27m
• Merrill's Sobotka Tells Colleagues He May Depart, People Say