Bear Stearns Managing Directors react to the news that, thanks to U.S. taxpayers, the value of their stock quintupled in one week.  

They grin, you Bear it . . .

Thanks, Uncle Schmuck!

By Samuel Insull
Financial Editor with Maria Boroaroma in Brooklyn

NEW YORK – Who says Wall Street doesn't have a heart?

Moved to tears by the wailing and keening of Bear Stearns shareholders reduced to middle-class status following the collapse of their stock price form $170 to $2, JP MorganChase raised its bid to $10 a share, as long as it retains the protection of a mere $30 billion, make that $29 billion, in debt guarantees issued by the taxpayers, or, as they are known on Wall Street, morons.

As a result of the taxpayers' indulgence, Bear Stearns managing directors are no longer forced to put their $20 million brownstones on the market or cancel the NetJets membership, leaving their trophy wives with no alternative but – gasp, flying coach!

As the former supremo of the Bear Stearns wrecking crew, Jimmy "Stony" Cayne, might put it, let's review the bidding.

Faced with the imminent prospect of a liquidity crunch that would have landed the Bear in bankruptcy court, with knock-on effects croaking financial institutions stuck with Bear paper of uncertain or no value, the Federal Reserve engineered a bailout of Bear Stearns.  Under that old deal, JPMorganChase would take over Bear, Bear's shareholders would be pretty much wiped out at $2 a share, and the Fed (that means you) would guarantee the value of about $30 billion of Bear Stearns toxic waste that JPMorgan would end up owning.

That deal lasted about a week. Apparently, the crying and rending of garments at Bear's midtown headquarters was more than tender-hearted JPMorgan CEO Jamie Dimon could take. After only a week of whining from Bear stockholders, not punctuated by anyone willing to spend their own money on a higher bid, Jamie decided to quintuple his bid, or, more precisely, his shareholders'.  

As a result of Jamie's rachmoniss, Bear shareholders will walk away with a cool $1.25 billion, up from $250 million.  About a third of that will go to Bear's employees, whose greed and incompetence, it will be remembered, ran the firm into the ground in the first place.

Empire State emperor slayer Ashley Dupré, shown here at the 2007 Bear Stearns muni auction rate preferred conference, expressed relief that her free-spending customers would not have to step down to $50 hookers.

Key to the old and the new deals was the Fed's willingness to guarantee the value of $30 billion or so of dreck on Bear Stearns' balance sheet. If the Fed has to pay JPMorganChase on that guarantee, it will have less money to turn into the Treasury. Who bears the shortfall?  You guessed it: the same taxpaying schmucks in danger of losing their homes and health insurance, which didn't come with the Fed guarantee enjoyed by Bear shareholders.

Sources on Wall Street regard the continuing $29 billion taxpayer guarantee, notwithstanding the billion-dollar markdown demanded by the Fed to cover its egregious payoff, in the light of the quintupled purchase price as the worst case of government-assisted ursine depredation since Yogi pilfered the pickinick baskets in Jellystone National Park. 

Reaction to the new deal in Manhattan was generally favorable, although some real estate agents with $20 million co-op listings suddenly snatched away were heard to grumble. But local recipients of the largesse of Bear big shots were grateful. Owners of four-star restaurants and $300-a-bottle clubs breathed a sigh of relief.

Perhaps the most excited service providers were Manhattan's high-priced hookers, already facing a decline in business caused by Eliot Spitzer's scarlet W. The gals had figured to lose a fortune due to the decline in business from Bear executives and their clients looking for a good time in the big town.

New York political regicide Ashley Dupré told the Spy's Maria Boroaroma that she had made over $25,000 from the Bear Stearns mortgage-backed trading desk alone. "I mean if I lose that action, I might have to, God forbid, move to Brooklyn. Oh, sorry, Maria."

Dupré's 15 minutes in the sun stand in stark contrast to the fate of her black-socked former customer, locked in seclusion in his Fifth Avenue penthouse, unable to explain to his wife why he was warming up a hunk of calves' liver in the microwave.