Bear Stearns posts huge loss, cuts exec bonuses

[Robbien]

Source: Reuters

NEW YORK, Dec 20 (Reuters) - Bear Stearns Co Inc posted a much bigger-than-expected quarterly loss on Thursday, capping a fiscal year when the fifth-largest U.S. investment bank took a beating on bad bets on risky subprime mortgages.

It was the first loss in the history of the company, which decided top executives would not receive bonuses.

Bank of America analyst Michael Hecht said Bear's smaller bonus pool could lead to attrition and hinder a strong rebound.

Read more: http://www.guardian.co.uk/feedarticle?id=7168738

---

Funny how fast market analysts jumped on the "no profit, no bonus" plan and started berating Bear Stearns for its bad move. Probably scared the logic will spread and other companies see the light and follow suit.

[aquart]

1. No 17 million dollar bonuses???? How will they survive????

Seriously, BS pays like 200,000 base pay and all the rest is in the bonus.

I cannot tell you how savagely pleased I am to hear this. Courts never did more than slap their wrists. But this they'll feel in their guts.

[Viva_La_Revolution]

2. You know it's bad when they cut the CEO bonuses...

[Joe Chi Minh]

3. Barclays, a UK high street bank is suing BS for between 150 and 200 million pounds.

I don't imagine it's a lot by their standards, but they'll sure be fighting it.

The article in the Evening News (Edinburgh) on the topic begins as follows:

"Barclays to sue over hedge fund collapse
Bank says Wall Street giant msirepresented health of investment

Jim Stanton (a relative of Arch? "Gold! Gold! I tell ye... water, give me some water")
Business Editor

BARCLAYS has filed a fraud lawsuit against Wall Street investment giant Bear Stearns over the failure of a hedge fund.
But the US bank claimed that the suit was a move by Barclays to mask responsibility for its own judgment.

Britain's third largest bank which was the sole investor in the fund, alleges that Bear Stearns misrepresented the health of a hedge fund it was lured into invsting in.

Two of Bear Stearns hedge funds collpased in June in what many analysts now view as the first sign of the seriousness of the sub-prime mortgage market crisis that began in the US, but which has affected banks across the world."

Apparently, Barclays could not yet determine what it was seeking as recompense for Bear's alleged "misconduct", because the New York securities firm witheld information that Barclays claimed it was was entitled to.

http://edinburghnews.scotsman.com/business/-Barclays-to...

[Divernan]

5. note: 200 million pounds equals approx. $400 million.

nt

[Divernan]

4. "(C)ould lead to attrition"?!?! Not bloody likely.

"attrition" implies the top executives will quit in huffs because they didn't get their bonuses. Well, guess what. There are NO jobs for them to go to - not at their present level of pay, or even for a lot less. The market for investmnt banking jobs is D E A D.

More from the article:

"Last year, Bear's top four executives received cash and restricted stock then valued at about $103 million. Chairman and Chief Executive Jimmy Cayne's total pay package was nearly $34 million.
Cayne has been the subject of unflattering articles about his time playing golf and bridge while the company's key fixed-income business stumbled amid the industry's subprime mortgage woes. He fired co-president Warren Spector and has shown no signal of relinquishing CEO duties to current President Alan Schwartz, as some outsiders have speculated."