Former SEC Boss Pitt Says Bear Rescue May Calm Markets
The combination rescue-fire sale package of Bear Stearns happened so quickly and involves so much unknowns about its balance sheet, analysts struggled to put its role in the credit crunch into perspective.
Here's a sampling of what the experts are saying:
Wall Street securities lawyer and former Securities and Exchange Commission Chairman Harvey Pitt called the Fed-JPMorgan Chasetransaction "an important step forward," adding it would "hopefully calm down the markets."
Pitt stressed that in the case of JPMorgan Chase's $2-a-share buyout of Bear, "you hope for the best" as you try to "salvage the business."
Pitt, who ran the SEC as the corporate corruption scandal unfolded amid a bear market, and others say it is way to soon to know the ins and outs of Bear's balance sheet, especially given its huge exposure to mortgage-backed securities.
Brian Belski, senior equity investment strategist at Merrill Lynch, warns the credit crunch "doesn't go away with two quarters of earnings write downs."
Richard Steinberg of Steinberg Global Asset Management says it is the time for "investors who have cash looking to buy things that may get prices by short term issues," adding that assuming that other firms share the depth of Bear's problems is a "misread on the market."
Mark Arian of Towers Perrin disagrees, saying Bear, "calls into question" the valuations of other players in the market.
Though JPMorgan Chase and its CEO Jamie Dimon are both highly regarded at the moment, Arian warns that "distressed mergers, shotgun marriages rarely work."