Best Business Commentary

Bear Stearns takeover, Round 2

JPMorgan CEO Jamie Dimon is “rolling over the U.S. Treasury and Federal Reserve,” said The Wall Street Journal in an editorial, and his success is “getting to be embarrassing.” When he agreed to buy Bear Stearns at $2 a share, if the Fed guaranteed $30 billion in “troubled” Bear securities, the deal at least had the “virtue” of relaying the “bracing” message that “bad things happen to reckless investors.” Now that JPMorgan’s paying $10 a share, Dimon gets his deal, Bear shareholders get more money, and “taxpayers are still on the hook for $29 billion.” Dimon is “a tough customer,” but it would be nice if “our public officials” were anywhere near as “stalwart” at defending our interests.

Dimon choked, said David Weidner in MarketWatch. Raising the price for Bear Stearns was “wrong-headed.” Dimon is probably Wall Street’s “savviest dealmaker,” and at $2 a share, he had “his foot on this deal’s throat” in a “masterpiece” of the hard bargain. So what happened? Maybe he underestimated the “shock value” and perceived insult of the original price. Or perhaps he “got a case of the pities” after facing devastated and angry Bear Stearns employees. But he broke the “golden rule of dealmaking: never, ever negotiate against yourself.” And he, of all people, should have known better. “Somewhere, Gordon Gecko is hanging himself with his suspenders.”

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