Considered Opinions

Feeling curious (don’t go there…), I dug up the latest Bear Stearns annual report, 2006. A delightful bit of light reading, which I am sure a rabbi well versed in the Kabbalah could decipher with ease.

What I was looking for was the executive compensation of the insane a—holes who ran this company (one of many, remember) into the ground over the last few years. Not surprisingly, this was nearly impossible to determine with any degree of accuracy from the annual report.

Some interesting information did pop up however, which make me feel that if Enron was a frat house, Bear Stearns was a whore house. See below.

In 2006, BS (note cunning pun) granted something like $135 million in stock options to its management. Exercise price ranged from $47 to $157 per share with the weighted average (“Weighted” makes you think of cement overshoes, doesn’t it? Nice thought.) being above $70. Interestingly, you can also find a figure of $108 million described in similar terms; I wonder which is right. But not for long, this is an annual report, after all.

Meanwhile, BS was carrying on its books a figure of $16.8 Billion (Note uppercase “B”) in questionable mortgages. I think that could be called exposure although nobody on mahogany row would consider it “risk;” I mean be reasonable – the whole purpose of derivatives is to eliminate that, right? Spread the risk, hedge like a bandit, yeah…

There was also, in the same table, a figure for “Maximum exposure to loss” of a mere $762 million. Given the events of the past week, there is the outside chance that this figure may be a slight underestimate, or a mathematical error. Let not the word “fraud” pass your ruby lips.

Well, BS is now on the bottom of the East River, blowing (small) bubbles, while JP Morgan counts the federal dough that secured its buyout of BS at $2 per share – a tad less than the value of BS’s management’s options. Such a deal!

And for sucking the marrow out of BS’s bones, grinding investors under their chariot wheels, and augmenting a national financial crisis, by avoiding bankruptcy, the management of BS retains the value of those options, plus whatever bonuses and salary the compensation committee could be bribed to supply. Instead of suffering, these guys will probably be hired by somebody at the University Club who tells them, “Hey, it almost worked. No big deal. Can you start Monday?”

Meanwhile, the economy has to dig its way out of a mortgage crisis that never should have happened. People lose their homes, their savings, their retirements, their kid’s education, the car, the dog, the cat, the litter box. What the hell happened to the concept of credit? Of being able to repay a loan? Why, transferring the risk to someone else as greedy (or dumb) as the guys who thunk up the idea in the first place. That’s what happened.

And who makes it all nice? Who makes it possible to keep the yacht, the Rolls, the house in the Hamptons, the mistress in Manhattan, the bum-boy in Brooklyn, the condo in Cannes, the thousand dollar suits, the $900/bottle wine, and – key — the tax-dodge corporation in the PO Box in the Caymans? Georgie Boy! He and his Treasury Secretary worked OVER THE WEEKEND! That’s dedication!

Maybe the Communists had something with that concept of “economic crime.”

I recommend life terms in a meat locker for Bear Stearns’ management and anyone else that freaking stupid, that freaking greedy, or that freaking evil. Barring that, they and their families should be stripped of all assets and made to live in cardboard boxes forever on the Brooklyn docks.