http://www.cato.org/pubs/briefs/bp-052es.html

But still, why should I believe that the Fed is acting in the best interests of the public? The NY Fed, which seems to take a lead role in these kind of things, has a 9 member board, 6 of whom are chosen by bankers. The NY Fed board includes Jamie Dimon , the CEO of JPMorgan Chase. The chair of the NY Fed is Stephen Friedman, who is also the chaiman of Stone Point Capital and retired chairman of Goldman Sachs. So, what exactly should persuade me that this wasn’t just a case of a bunch of bankers using $30 billion in public money to eliminate their competition?

Look, my heart says some of these scum should be shot too (though on what we know so far, Bear Stearns’ people were no more unwise or greedy than their peers – they just happened to be the first to face the inevitable run). Nationalisation would at least take their bonuses and put them out of a job.

But my head says that on Friday the Fed had no choice but to do what it did, for fear of much worse injustice (ie average joes losing their jobs). By all means argue about overly-lax credit, regulation, etc afterwards. In the meanwhile this was battlefield medicine.

Actually, no. There’s a difference between – a large share of the employees own stock in the company – and – the company is largely employee owned.

That said, anybody whose read the Times realizes that JPM is working out the details to retain Andrew Schwartz, who we are assured is a huge “asset” to Bear Stearns.

The larger point, however, is that this was, of course, a bail out. The Fed, loaning money to JPM for the takeover, accepted as collateral securities which no bank would have accepted as collateral. Now, if you go to the fed, say I want a loan of 30 billion dollars, and as collateral, here are all my dirty t shirts – and they give it to you – that is called a bail out.

But of course, in rightwing America, where the S-Chip is a wild and whacky form of Leninism, money going directly from the government to the wealthiest is simply considered part of the proper feudal order.

One of the things that has not been commented upon enough is the Brownie like behavior of Bush’s SEC Chair pick, Cox. This is a pretty good link summing up the case for Cox resigning. Cox’s statement last Tuesday – “We have a good deal of comfort about the capital cushions that these firms [the five largest investment banks, which included Bear Stearns] have been on” should definitely be put on the roll of funny moments in the Bush reign of error. Well, elect a chimp, get ruled by apes. I guess that is the rule.

Since the company was largely employee owned, your division between stockholders and executives isn’t accurate.

And since JP Morgan is talking about laying off half of Bear Stearns in the acquisition (see for example here) they aren’t keeping their jobs either.

Which leaves I’m not sure what of your argument to respond to.

Depending on how much moolah they’ve managed to acquire for themselves over the last few years, they, in fact, might’ve made excellent choices.

No, the investors didn’t make poor choices. The Bear Stearns executives who actually controlled the company made poor choices, and are being bailed out, in that they don’t lose their jobs or their money, aside from what small proportion of their fortunes is actually in BS stock at this very moment.

there’s about 30 billion reasons why.

Why is everyone talking about a bailout? Bear Stearns investors are losing everything and almost certainly getting less than they would in bankruptcy. And that is as it should be. They made poor choices and lost 98% value on their investment.

The key is to create a situation where you don’t sell off all the assets at once, flooding the market and knocking off prices further. This way you get an orderly sell off over time.

As c.l. ball notes, Jimmy Cayne is a bridge player, not a poker player (and, as such, is much more in character for a banker). Erroneously jumping to the poker conclusion to make what possibly seemed to some to be a salient point in a blog comment should be some sort of a lesson, though I’m not sure which one.

It’s not a binary. There are a range of possible consequences for the executives at a bailed-out firm like Bear Stearns. Obviously they are not literally going to be shot but there are a range of things more or less along those lines that could indeed happen. Like, they could go to jail.

Anyway, talking about shooting Bear Stearns executives seems like it only lead to good things.