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Bear-Trap: The Fall of Bear Stearns and the Panic of 2008 Hardcover – 22 Sep 2008


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Product details

  • Hardcover: 235 pages
  • Publisher: Brick Tower Press (22 Sept. 2008)
  • Language: English
  • ISBN-10: 1883283639
  • ISBN-13: 978-1883283636
  • Product Dimensions: 16.2 x 2.3 x 23.6 cm
  • Average Customer Review: 2.5 out of 5 stars  See all reviews (2 customer reviews)
  • Amazon Bestsellers Rank: 1,698,406 in Books (See Top 100 in Books)

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Synopsis

Bear, Stearns & Co. is a storied Wall Street firm with a maverick reputation, had endured many crises in its 85-year history. Nothing, however, could have prepared the firm for the sudden death spiral that would lead to its take-over for a pittance. In a dramatic showdown with JP Morgan and the Fed, this is the tragic story of how fortunes were made and lost. Anonymous, a senior executive at Bear Stearns, had a bird's eye view of just what happened inside Bear's offices and on the trading floor that led to the most sensational financial crisis of our times.

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Most Helpful Customer Reviews

1 of 1 people found the following review helpful By Charles Wahab on 13 Mar. 2009
Format: Hardcover Verified Purchase
I think this book is a good read if you are in finance, because it gives you an insight to how it really is on "The Street". Bear Stearns have always been the sharp-elbowed, go-getters, who didn't care. Jimmy Cayne snubbed the Fed when LTCM were in trouble, and refused to pay up. This was pay back time, and Bamber described it well. I did learn a couple of things that most people, even Bear insiders didn't know, like how JP was to be liable for Bear's trade positions for a year even if the acquisition didn't go through, and I think u really needed to be in the show to know. I also have friends who worked there, and the "it's over" limbo status that they went through in March and after that, is very true. Bamber is a bit corny sometimes, and his surfer/native analogy is a bit too American melodrama, but overall if you want to get ur head round what happened, its good for general knowledge. If you are an Executive VP at MS or Hank Paulson's aide, you probably know better than Bamber does, but, if you're warming up the ladder, then its not bad.
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0 of 1 people found the following review helpful By Gary Ballbag on 13 Nov. 2008
Format: Hardcover
I was at bear when the whole thing happened. So far I haven't met anyone who knows "Bill Bamber" even though he really appears to have been at bear. Regarding the book... I didn't find any interesting information in it. I regret buying it... I'm a Seller... any buyers???
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Most Helpful Customer Reviews on Amazon.com (beta)

Amazon.com: 30 reviews
16 of 16 people found the following review helpful
Wait for a good book on Bear collapse - this is not it! 23 Sept. 2008
By Robert Heller - Published on Amazon.com
Format: Hardcover
My previous one-star review of this book was removed by Amazon, along with another one written by a different reviewer. So keep in mind that AMZN actively removes some reviews.

I am a former (long time ago) Bear employee. While I will give credit (and one star) for the author's good explanations of Wall Street and some of the more exotic products, if you are looking for insight into the causes of the Bear collapse, you won't find them here. Other reviewers have stated correctly that you would be better off reviewing newspaper coverage of the events to learn what happened.
8 of 9 people found the following review helpful
Insightful, but not of Bear Stearns 1 Jan. 2009
By Donald M. Fraser - Published on Amazon.com
Format: Hardcover
What I found interesting about this book is the complete lack of responsibility or culpability of a typical Wall Street trader in the financial collapse. Bill Bamber claims his firm was a "martyr for the sins of Wall Street" (chapter 10). That Bear Stearns was anything but a house of cards that employees were profiting handsomely off of while placing investor money at great risk is never made a case for. As the information has no depth other than any one else reading a newspaper would have, this book more supports that conclusion than refutes it.
I'd add that investors of Bear Stearns were also very poorly served by the firms employees, a group Bamber has very little sympathy for. Were the firm's employees really the unwitting dupes portrayed or the wizards of Wall Street they would like to think of themselves as?
This book is also poorly edited and redundent, I slogged through it only to justify my review.
6 of 7 people found the following review helpful
Absolutely BAD! 6 Oct. 2008
By read everything - Published on Amazon.com
Format: Hardcover
Nothing new here. If one read the papers, he would be as informed as after finishing the book. Moreover, the author wants us to understand how intellectual he is by presenting historical facts which for the most part are irrelevant. And the whole discourse on being a "tragic hero" is just pitiful. I am not sure where the author is now, but I think he should stick to trading derivatives!
1 of 1 people found the following review helpful
A MARVELOUS "INSIDER'S" VIEW OF THE FALL OF THE 5TH LARGEST INVESTMENT BANK 14 April 2012
By Steven H Propp - Published on Amazon.com
Format: Hardcover
Bil Bamber was a Senior Managing Director at Bear Stearns; Andrew Spencer is also the author of Tower of Thieves, AIG. Bamber wrote in the Prologue to this 2008 book, "Because this is a first-hand account of what happened inside the office at 383 Madison Avenue, it's a personal story. And like all personal stories, it's got its own accusations and moments of finger-pointing. One such accusation is that the Secretary of the Treasury actually wanted to see Bear go down. Of course... it's impossible for me to say for certainty that those were his explicit intentions..."

They propose to answer questions such as, "Why was this facility (i.e., Fed bailout) not made available to Bear to prevent its fall in the first place? Why was Bear given to JPMorgan at a fire sale price? Why JPMorgan and not some other bidder?" (Pg. ix) They note ruefully, "if Bear had been given access to the Federal discount window, we could have borrowed money... to keep us afloat, to keep us in business... But the discount window wasn't available ... until after we were declared finished. You can draw your own inferences." (Pg. xiv)

They admit that "just like in 1929, there was too much of a good thing. It couldn't last." (Pg. 19) Bamber concedes that by originally accepting a job at Bear, "I had implicitly gone over to the Bear Stearns way of thinking. I had subscribed to the firm's philosophy of living for the moment." (Pg. 23) Later, he states, "We were drawn to Bear because of the lack of structure, the free-and-loose attitude that prevailed..." (Pg. 187)

They assert that the Fed was only coming to the rescue of banks "after they'd basically assured the demise of Bear Stearns... from the point of view of a lot of employees... this mess... (was) an act of revenge on the part of a few people who thought they'd been done wrong by Bear in the past... They were gunning for us, no doubt about it; they would extract their revenge from the hides of the Bear Stearns employees one way or another." (Pg. 137)

They admit that "To outsiders, we were overpaid crybabies... We got annual bonuses that were more than a lot of people made in ten years. But we worked hard for those bonuses... and the majority of those bonuses were tied up in restricted stock options... somebody gave us money then tied our hands behind our back. Then, while we were bound, somebody else came and took 90% of our income while we were unable to defend ourselves... In the end ... this whole mess was really nobody's fault; we were just the ones paying the price." (Pg. 173)

Ultimately, they agree that if the Fed had not taken the steps it did, Bear would have been only the first in a series of investment banks to go insolvent. (Pg. 195) Treasury Secretary Paulson "wanted to send a message to Wall Street, and Bear was the messenger. As soon as he'd made his point, though, he wanted to reassure investors that it wouldn't--couldn't---happen again." (Pg. 200) Although they feel that Paulson "betrayed Bear," Paulson "ended up doing exactly what needed to be done in order to prevent the same thing from ever happening again. And for that, all of us who make our living in the financial sector should be forever grateful to him." (Pg. 209-210)

This is a fascinating "inside" look at one of a catalytic events in the Recession of 2007-2009.
3 of 4 people found the following review helpful
Full of Excuses and Extraneous Material; Short of Explanations! 7 Feb. 2009
By Loyd E. Eskildson - Published on Amazon.com
Format: Hardcover
Bamber's objectives are to be excuse Bear Stearns management for the firm's collapse, while telling the story of its collapse. Unfortunately, he instead fills the book with irrelevant material and fails to accomplish either goal.

Bamber contends a 3/10/2008 rumor that Bear Stearns was having liquidity problems started the downward spiral, this was acerbated by short-sellers, and that Treasury Secretary Paulson wanted Bear to fail in retribution for its failing to assist in the LTC bailout ten years prior. Only one week later the firm was negotiating its sale to J.P. Morgan for $2/share.

Bear Stearns, like many others, believed housing prices would continue to go upward, and loaded two of its hedge funds with leveraged AAA and AA tranches of mortgage-backed CDOs, with default insurance provided by CDS. (The leverage was acquired by pledging each layer of CDOs for new borrowing to finance the next layer.) On 7/31/2007 both funds filed for bankruptcy. The declining value of its CDO collateral forced Bear Stearns to unwind the two hedge funds.

Funding for purchasing CDOs came from other Wall Street Banks and their investors - this avoided conflict of interest, double-dipping of fees, and left Bear free of credit concerns. The company only had one person overseeing the $20 billion involved because Bear had little money tied up in them itself; Bamber alleges the problems would not have occurred absent the "Chinese Wall" that existed between the hedge funds and asset traders. (Makes no sense to me.) Both fund managers were charged with fraud - talking the funds up publicly, while dumping their own shares and disparaging them in internal e-mails.

How Bear Stearns got from its 7/31/2007 hedge fund bankruptcy declaration to its 3/17/2008 takeover is not discussed. Another void is the allegation that J.P. Morgan went from its original $2/share offer to $10/share because it assumed Bear's obligations for a year - whether the deal went through or not. How this obligation was resolved is not covered either.

On an aside, readers do learn the Hank Paulson made $3.7 billion as a Goldman-Sachs fund manger in 2007 by betting the markets for home mortgages and CDOs would both decline. In a backdrop of such obscene profits it is impossible to feel sorry for any of the Bear Stearns principals in this tragedy.
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