Jim Cramer: "They know nothing!"

Jim Cramer: Bernanke is being an academic.  It is no time to be an academic.  It is time to get on the Bear Stearns call.  Listen, open the darn Fed window.  He has no idea how bad it is out there!  He has no idea!  He has no idea! 

Erin Burnett: Cramer.

Cramer: I have talked to the heads of almost every single one of these firms over the last 72 hours and he has no idea what it's like out there.  None!  And Bill Poole?  Has no idea what it's like out there.  My people have been in this game for 25 years!  And they are losing their jobs and these firms are gonna go out of business and he's nuts!  They're nuts!!  They know nothing!!

~ Jim Cramer, CNBC discussion with Erin Burnett, 2:00 mark, August 3, 2007

Jim Cramer: "Bear Stearns is not in trouble" (2008)

Dear Jim: Should I be worried about Bear Stearns in terms of liquidity and get my money out of there? --Peter

Cramer says: “No! No! No! Bear Stearns is not in trouble. If anything, they’re more likely to be taken over. Don’t move your money from Bear.”

~ Jim Cramer, CNBC's Mad Money, March 11, 2008

Jimmy Cayne on the collapse of Bear Stearns due to market forces

The market's loss of confidence, even though it was unjustified and irrational, became a self-fulfilling prophecy. Subsequent events show that Bear Stearns' collapse was not the result of any actions or any decisions unique to Bear Stearns. Instead, it was due to overwhelming market forces that Bear Stearns, as the smallest of the independent investment banks, could not resist. Only a few months after Bear Stearns collapse, the same market forces caused the collapse and near-collapse of much larger institutions such as Lehman Brothers. The efforts we made to strengthen the firm were reasonable and prudent, although in hindsight they proved inadequate. Considering the severity and the unprecedented nature of the turmoil in the market, I do not believe there were any reasonable steps we could have taken, short of selling the firm, that could prevent the collapse that ultimately occurred.

~Jimmy Cayne, former chairman and CEO, Bear Stearns, opening remarks in testimony given to the Financial Crisis Iniquiry Commission, May 5th, 2010

Alan Schwartz on speculation and rumor as the cause of the fall of Bear Stearns

During the week of March 10th, 2008, unfounded rumors and attendant speculation began circulating that Bear Stearns was in the midst of a liquidity crisis. Due to the stressed condition of the credit market as a whole and the unprecedented speed at which rumors and speculation travel and echo through the modern financial media environment, the rumors and speculation continued throughout the week. The rumors thus became a self-fulfilling prophecy and there was, simply put, a run on the bank.

~Alan Schwartz, former CEO, Bear Stearns, opening remarks of testimony given to the Financial Crisis Iniquiry Commission, May 5th, 2010

Bill Miller on his decision to invest in Bear Stearns

When it failed in March [2008], it had the highest capital ratios ever. There was no rogue trader... But that didn't stop a run on the bank.

~ Bill Miller, portfolio manager, Legg Mason Value Trust, "It's Miller Time!," Barron's, October 12, 2009

(Bear Stearns was eventually purchased by JPMorgan Chase for $10 a share, leaving Value Trust with a huge loss.)

Alan Schwartz on Bear Stearns: No liquidity crisis (2008)

We don't see any pressure on our liquidity, let alone a liquidity crisis.

~ Alan Schwartz, CEO of Bear Stearns, March 12, 2008

Bloomberg: Analysts mostly missed Bear Stearns implosion

Analysts did a particularly dismal job of perceiving what was going on in their own industry. The majority of the 17 analysts covering Bear Stearns Cos. had rated the stock "sell'' or "hold'' through 2006, when its price increased 42 percent. Most of the analysts who had had a "buy'' on the shares failed to downgrade them before July 2007, when two Bear hedge funds heavily invested in mortgage-backed securities went bankrupt.

~ "Why Paul Miller in Virginia Is Wall Street's Best Stock Picker," Bloomberg, June 19, 2008, by Kambiz Foroohar

Sandy Weill on Jamie Dimon and his rescue of Bear Stearns

I'm very proud of him. What he did was something great for the whole financial industry, preventing God knows what.

~ Sandy Weill, March, 2008 (after the JPMorgan-Bear Stearns deal was announced)

Bear Stearns co-president on financial downturns (2006)

We are not afraid of a bear market. We've gained market share in these cycles.

~ Warren Spector, Bear Stearns co-president, "Dealer's Choice," Institutional Investor, November 2006, by Pierre Paulden

George Will on Wall Street bailouts from Chrysler to Bear Stearns

[S]uddenly the Fed is undergoing radical "mission creep." The description of the Fed as the "lender of last resort" is accurate without being informative. Lender to whom? For what purposes? Last resort before what? Did the bank "lend" $29 billion to Bear Stearns, or did it, in effect, buy some of the most problematic securities owned by Bear? If so, was this faux "loan" actually to J.P. Morgan Chase? The purpose of the money was to give Morgan an incentive to buy Bear -- at a price so low that an incentive should have been superfluous.

In 1979, when the government undertook to rescue Chrysler, conservatives worried not that the bailout would fail but that it would work, thereby inflaming government's interventionist proclivities and lowering public resistance to future flights of Wall Street socialism. It "worked": Chrysler has survived to endure its current crisis. The fallacious argument in 1979 was that Chrysler was then "too big to be allowed to fail."

Today's argument is that Bear Stearns was so connected to the financial system in opaque ways that no one could guess the radiating consequences of its failure -- the financial consequences or, which sometimes is much the same thing, psychological.

But what is now the principle by which other distressed firms will elicit Fed interventions in future uncertainties? By what criteria does Washington henceforth determine whether a large entity is "too connected to fail"?

The Fed has no mandate to be the dealmaker for Wall Street socialism. The Fed's mission is to preserve the currency as a store of value by preventing inflation. Its duty is not to avoid a recession at all costs; the way to get a big recession is to engage in frenzied improvisations because a small recession, aka a correction, is deemed intolerable. The Fed should not try to produce this or that rate of economic growth or unemployment.

After the tech bubble burst in 2000, the Fed opened the money spigot to lower interest rates and keep the economy humming. And since the bursting of the housing bubble, which was partly caused by that opened spigot, the Fed has again lowered interest rates, which for now are negative -- lower than the inflation rate, which the open spigot will aggravate.

~ George Will, "The Fed Muddles Through a Bailout," Townhall.com, April 20, 2008

Dick Bove on Bear Stearns bailout

What the Fed did was absolutely necessary. If Bear Stearns had failed, it would have crashed the financial markets.

If a financial firm of this size fails, it pulls all the others with it.

~ Dick Bove, banking analyst at Punk Ziegel, "Bear Stearns Dives After Fed Steps In With Bailout Funds," IBD, March 17, 2008

(He added that Bear's woes threaten banks overseas that are tied to the firm via a web of reciprocal guarantees and agreements. )

Rick Santelli on the Bear Stearns bailout

If this is how the U.S. government is going to operate in a democratic, free-market society, we might as well put a hammer and sickle on the flag.

~ Rick Santelli, CNBC Reporter, April 2, 2008

Bear Stearns analysts upgrade New Century (2007)

The potential downside in the stock if the company is forced to sell or liquidate is roughly balanced with the potential upside.

~ Scott Coren and Michael Nannizzi, analysts at Bear Stearns, from a research note, "New Century upgraded at Bear Stearns," MarketWatch, March 1, 2007

(The two analysts lifted their rating on New Century to peer perform from underperform. Shares climbed almost 3% to $15.78 during afternoon trading Thursday. They've still slumped almost 50% so far this year due to signs of a credit crunch in the subprime-mortgage industry.)

Cramer on Goldman Sachs et al. (2007)

This is a liquidity issue, not a credit issue… If you panic out of Goldman, Bear Stearns, and Lehman right now… you’re an idiot!

~ Jim Cramer, as appeared on CNBC, June 22, 2007

(Goldman closed at 222.40, Bear at 143.75, and Lehman at 76.62.)