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Minyanville Founder and CEO Todd Harrison dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.

Holy cow, can it be any slower out there? I'm taking a break from trying to set the all-time record for meetings on a "slow" summah Friday to offer a quick take on a few topics.

Will Lehman Brothers Holdings Inc. (NYSE: LEH) get married over the weekend?

• There hasn't been any price talk on Lehman so even if it happens, it's a bit of a crap shoot. Remember Minyans, Bear Stearns was taken over too.
  
  
• There is no doubt franchise value and a lot of smart people at Lehman. There's also a lot of baggage on their balance sheet. It -- like most of the financials -- is a double-edged sword.

Bloomberg News reports that Wall Street layoffs are putting blood on the streets. But those Wall Street vets have turned those layoffs into new careers -- one Harvard economics grad who formerly worked for Bear Stearns has started a business making cupcakes. That's because, as Bloomberg reports, Michael Maloney, who recruits finance professionals for Maloney Inc. in New York, said, "The job market is in the worst, most chaotic state I've ever seen it in fixed income. I've been doing this for over 30 years and I've never seen anything like this."

The statistics Bloomberg cites are stunning. 76,670 investment jobs "in the Americas" have gone up in smoke "following the global credit crunch that started a year ago." And 33,300 finance jobs in New York City, or "7.1% of the 2007 peak, will be cut by June 2009." And those who lose their jobs will be giving up big money. Wall Street workers averaged $399,360 in 2007 -- six times the $62,390 for New York City jobs outside the securities industry.

So the tough are turning to making cupcakes. Jessica Walter, who studied economics at Harvard, was vice president in credit strategy at Bear Stearns. Bloomberg quotes Walter as saying, "I want to teach kids to cook. The goal is to have this be my full-time job and make enough to live.'' To that end, she founded Cupcake Kids! in New York to provide birthday parties and cooking classes for children.

Rumors have swirled about the rapid collapse of Bear Stearns, with a lot of people -- even some normally credible commentators -- absolutely convinced that the company was a victim of a bear raid and naked short selling, and malicious rumor mongering that led to a run on the bank, sealing the bank's fate.

An interesting piece from Bloomberg discusses the suspicious options trading in the stock: on March 11th, someone bought $1.7 million worth of put options, effectively betting that shares of Bear Stearns would decline by nearly 50%. Bloomberg reports that "options specialists are convinced that the buyer, or buyers, made a concerted effort to drive the fifth-biggest U.S. securities firm out of business and, in the process, reap a profit of more than $270 million."

Interesting. But isn't it also possible that the puts were purchased by someone with insider information about the company's disastrous financial position? Must we assume that the only person who would be willing to bet big on Bear's collapse was a malicious short seller who was spreading rumors like Perez Hilton, working overtime to assure a run on the bank? It just seems a little melodramatic. It's not even James Bond -- more like Mack Bolan.

Before we feel to bad for Bear Stearns -- and record it in the history books as a victim of an outside invasion -- it's important to keep in mind what allowed rumor mongers to destroy it, if indeed they did: the company had no credibility, a result of its long insistence that everything was fine.

Bear Stearns was a company that treated its shareholders with scorn, never leveled on the company's true financial condition, and didn't even bother to disclose that its bridge-playing, allegedly marijuana-smoking CEO was seriously ill in the hospital while the credit crisis raged on.

My brother William Cohan's Fortune cover story on Bear Stearns' former CEO Jimmy Cayne has many fascinating tales. (Fortune and BloggingStocks share the same parent -- Time Warner (NYSE: TWX)). I found three to be most interesting.

• Bear was brought down by Fidelity and Federated Investors - Fortune argues that Bear depended on the market for 'overnight repos' -- loans of a one-day term collateralized by securities -- for $50 billion of its working capital. Bear used 71% of its mortgages as its collateral and according to Fortune, "Bear's reliance on overnight Rep effectively gave the overnight lenders -- such as Fidelity and Federated Investors -- a vote on the firm's viability every night. And during that fateful week in mid-March, those overnight lenders voted a collective no. The result? Bear Stearns did not have enough cash on hand to meet customers' demands during the run on the bank."
• Cayne nearly died of sepsis 11 months ago - The article begins, "In the early morning hours last Sept. 11, a black Town Car pulled up to the entrance of New York-Presbyterian Hospital in Manhattan. Inside the sedan Jimmy Cayne, the CEO of Bear Stearns, was close to death."
• Ace Greenberg planned to ask Barbara Walters to marry him the day before she wed Merv Adelson - Fortune says that Bear's Ace Greenberg told Cayne that he was was dating Walters and was planning to marry her. According to Fortune Greenberg told Cayne, 'I've decided I'm going to marry Barbara Walters.' The very next day in the papers she's engaged to Merv Adelson."

For the full story, read the article.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Time Warner securities.

As a sign of how disconnected one can be, I had to ask my 12-year old about Steve & Barry's. I had not heard of it and it is receiving way too many comments on our site to be ignored. My colleague Zac Bissonnette started blogging about it a month ago Steve & Barry's on the brink of bankruptcy? and the comments are still coming in strong as the story progressed.

Steve & Barry's filed for Chapter 11 bankruptcy on July 9, 2008, and information about its status and answers to frequently asked questions can be found here.

The company has been expanding rapidly and clearly hit a brick wall with consumer budgets severely strained and the economy facing uncertainty in the short term. However, this is supposed to be a discount chain. Perhaps the discounting amounted to selling dollars for ninety cents, and it could not make it up on volume.

This is a relatively small company, but clearly it matters to a lot of people. The number of comments we have received has surpassed most of our recent stories, even those of the Bear Stearns takeover (acquired by JPMorgan Chase (NYSE: JPM)) and the IndyMac (NYSE: IDMC) collapse.

Steve & Barry's might have had an IPO sometime in its future, but that is not likely in the current environment. What is it that makes this story so compelling to our readers? If it is because the stores are so great, what went wrong in your neighborhood?

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of any of JPM.

On Tuesday, the Securities and Exchange Commission threw a brushback pitch at those who are betting on the further collapse of our big financial institutions. Instead of suggesting better oversight of the companies, the SEC is going after short sellers.

For 30 days starting Monday, short-selling will be restricted on 19 financial companies. Financial regulators are also cracking down on "sensational rumors." To put the short-selling rule in perspective, consider that even when the market re-opened after the September 11th attacks, the SEC considered, but didn't implement, short sale restrictions.

Since Bear Steans collapsed and Vanity Fair bought the company's story that short-sellers did them in, everyone is worried that short sellers are bringing the market down. And I'm sure they are, but short-selling, after all, is legal. The SEC just loosened rules on it last year.

Yesterday, SEC chair Steven Cox testified that he's worried about short-selling in connection with spreading false rumors to manipulate the market. OK, that's not legal, but as Cox pointed out, the SEC brought its first case -- EVER -- for this sort of deception this year. And it still hasn't gone after anyone for spreading false positive rumors about a company.

With shares in Lehman Brothers (NYSE: LEH) losing another 14% of their value Monday, and the stock trading under $13, rumors are swirling as to what the bank is planning to do. While there has been speculation that the bank may be taken private, an option that I think is very interesting, others have said that another bank is going to swoop in and take over the company. At the discount levels the stock is trading, that may make sense. The only problem is who the buyer will be.

MarketWatch has an interesting article about this issue and the claim is that there really is no one out there to make a bid for the struggling investment bank. The article quotes Jeff Harte, a securities industry analyst at Sandler O'Neill & Partners, " I'm hard pressed to give you many viable buyers of Lehman. Most large banks are focused on their own capital issues. Even if a bidder did come forward, it would have to win over a lot of Lehman employees -- who control around 30% of the stock -- or risk losing them once the deal was complete."

The most obvious suitor would be JPMorgan (NYSE: JPM), but it has its hands full with Bear Stearns. Other banks like Citigroup (NYSE: C) or Wachovia (NYSE: WB) are fighting for survival. That leaves us with European banks, many of whom are also trying to stay afloat. One bank that has the money needed to finance a deal could be Deutsche Bank (NYSE: DB). It could be interested in a deal as it would gain a foothold into the fixed-income desk at Lehman. The only problem is that the bank is focused on growing its retail banking franchise, not investment banking.

Which leaves us with the first option as the best one. Go private. Clean up the balance sheet, get profitable, wait a few years for the financial storm to pass, and go public once again.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 7/15/08.

Yesterday I blogged, with a good degree of skepticism, about the SEC's announcement that it is cracking down on rumor-spreading fear mongers looking to profit from declines in stocks like Fannie Mae and Freddie Mac. In one of his daily email newsletters, hedge fund manager/all-around smart guy Whitney Tilson quotes one of his friends:

Thank God someone is doing something about this. Because, as we all know, our financial regulators have done such a good job in overseeing the institutions that are suffering from this evil conspiracy. What would be even better is if the SEC, NYSE, etc. could identify and "bring to justice" those hedge funds and short-sellers that, through a vast conspiracy with the ever-compliant press, forced bank/brokerage management teams to make the trillions in bad loans that now imperil our economic system.

Exactly. Regulators did nothing to protect investors and consumers from this mess, and have sat idly by while so many companies have failed to level with investors about their problems. The reason that the rumors have such impact on the market is that many investors have concluded, correctly, that they can't rely on these firms to provide timely updates about their prospects. If BEAR STERNS COS INC (NYSE: BSC) was a victim of rumor-spreading short sellers, it was also a victim of its diminished credibility that created an opportunity for manipulation in the first place. The SEC should focus on actual problems, not rumors which, last time I checked, have always been part of the market.

I try not to do posts solely for the purpose of linking to someone else's great work but this item fro DealBreaker is probably the funniest thing I've read since Bear Stearns' insistence that its liquidity was fine: an article in the latest issue of Vanity Fair cites unnamed sources stating that a few well-known hedge funds plotted the company's demise -- and then laughed about it over a celebratory breakfast.

Bess Levin rips into the conspiracy theories with the post Who Killed Bear Stearns And Then Laughed About It At Denny's? We're Gonna Go With NO ONE:

Let's just say they did spread the rumors, which I don't believe they did (and, as an aside: if a company can be brought down by the corporate equivalent of 7th grade girls passing notes in class, perhaps it doesn't deserve to existence anyway). There is no way in hell this meal took place. Ken Griffin and Steve Cohen are not stupid enough to go chest bump over egg McMuffins with the rotting corpse of Bear Stearns at their table (that kind of genius is -- or was -- reserved for the upper echelons of BSC management).

Exactly.

Six months of 2008 are now behind us and the stock market has not been a friendly place to most investors. Stability that was once found in household names that were industry giants is gone, and they have now been brought to their knees.

Many of them were the stocks we might have looked to in the past for stability, so you can be sure I put forward my five candidates with a little trepidation, but forward I go anyway. First a little review is in order.

Citigroup Inc. (NYSE: C) dropped from around $53 per share last year to around $30 in January and we can buy it today for around $17. Even at that price Goldman Sachs (NYSE: GS) has downgraded it to a sell and thinks there is more bad news to come. Citigroup was the largest bank in the world. Not any more.

General Motors (NYSE: GM) was the largest car maker in the world. That was before the stock tumbled from $43 to its current $11 range. A crushing blow to long time investors hoping that someone in the company could stop the ship from sinking.

MAJOR PAPERS:

• Long Island, NY's Astoria Financial Corp (NYSE: AF) has found a novel way to reduce the number of its nonperforming loans by changing its internal policy on when mortgages are classified on its books as troubled, the Wall Street Journal reported. By counting home loans as non performing when the borrower misses at least three payments, not two, Astoria reduced its non-performers to $69M from $106M in three months.
• The Wall Street Journal also reported that the indictments of Matthew Tannin and Ralph Cioffi, two former Bear Stearns hedge-fund managers, are expected to cite a personal e-mail suggesting the funds were "toast," four days before they told investors they had little to worry about. JP Morgan Chase & Co (NYSE: JPM) has said it will cover the legal costs of the fund managers.
• Hewlett-Packard Company (NYSE: HPQ) is set to reorganize its printer unit. The Wall Street Journal said that the unit's five business units will be cut down to three to become more efficient at adapting to a marketplace in which consumers are relying less on printing.
• According to people close to the situation, the Financial Times reported that Anheuser-Busch Companies Inc's (NYSE: BUD) board of directors is planning to meet this week to discuss the $46B bid from rival brewer InBev.

Graphic novels are generally targeted toward a market the could best be described as anime freaks: junior high and high school kids who shop at Hot Topic, listen to bad music, and read graphic novels.

For reasons that aren't immediately clear, Portfolio decided to make the collapse of Bear Stearns Co. Inc. (NYSE: BSC) into a graphic novel, focusing on the days leading up to the fire-sale to the Fed-back JPMorgan Chase & Co. (NYSE: JPM). It's a neat idea but, by focusing exclusively on the company's last days, the comic portrays Bear's collapse as a run on the bank caused by malicious and unfounded rumors. The reality is that Bear made huge, risky bets on bad securities, and collapsed because of mismanagement. A "run on the bank" may have had something to do with it, but that's always the case: companies don't go under until people stop giving them money.

But in a financial press with a lot of very similar content, we should at least give Portfolio props for doing something a little different.

Lehman Brothers Holdings Inc. (NYSE: LEH) Chief Executive Richard Fuld continues to keep his job even though shares of the New York-bank have slumped more than 60% this year. Meanwhile, American International Group Inc. (NYSE: AIG), whose shares are down 42%, ousted CEO Martin Sullivan because of the continued poor performance of the world's largest insurer.

Why didn't Fuld follow Sullivan onto the unemployment line, albeit the cushy one for failed CEOs? It makes no sense.

Last week, Fuld shocked investors by pre-announcing that Lehman lost $2.8 billion, or $5.14 per share, results that were officially confirmed today. In the earnings release, Fuld proclaimed the results as "unacceptable" and vowed to "take the necessary steps to restore the credibility of our great franchise." Well, at least he says that's what he wants to do. He dismissed Lehman President Joseph Gregory and Chief Financial Officer Erin Callan last week. On the conference call, Fuld even took responsibility for the loss and investors cheered this act of contrition, sending shares of Lehman up.

The euphoria is not going to last. I am not sure why Wall Street believes that Fuld can extricate Lehman from the financial quagmire that occurred on his watch. They certainly did not give Merrill Lynch & Co.'s (NYSE: MER) Stan O'Neal and Bear Stearns & Co.'s (NYSE: BSC) James Cayne or Citigroup Inc.'s (NYSE: C) the benefit of the doubt.

• If Lehman (LEH) isn't the second coming of Bear Stearns, won't "sell the rumor, buy the news" come into play?
  
  
Why can't I shake the sense that a serious downside dislocation is lurking in the wings this summer?


Given the massive two-sided directional potential, have you defined your risk (both ways) in kind?


After all, doesn't setting stops remove emotion?


Another day, another dime (10%) for WaMu (WM) the killer whale?


• What does it say that the New York Stock Exchange internals are still flat to the share?
  
  
• The kid' from Oakland - what did you expect?
  
  
How could it possibly take me this long to see Charlie Wilson's War?

R.P.

This post is part of a series on some of the most memorable companies that have disappeared.

Going, going, gone!

No more Bear Stearns. What a shame. It did not have to be, but alas -- bad management, greed, and too much negativity on Wall Street made it unsustainable when sustainability is the word of the day. It is, or should I say was, one of the foremost investment banks on Wall Street for many decades.

JPMorgan Chase (NYSE: JPM) completed it acquisition of Bear Stearns (NYSE: BSC) on May 30, 2008. As a result, Fitch Ratings has upgraded the ratings of BSC and removed them from Rating Watch Positive, where they were originally placed on March 17. As the direct and sole owner of BSC, JPM has assumed the capital structure of BSC.

Bear Stearns had been one of the top investment banking, clearing, and brokerage firms in the United States, serving major corporations, institutions, governments, and high net worth individuals. Through several subsidiaries, it provided asset management, lending, and merger and acquisition advisory services. It's been a leading market-maker for NYSE-listed securities (through Bear Wagner Specialists), as well as for OTC shares, corporate and government bonds, and derivative products.

It was these derivative loan instruments that did them in. Bear Stearns, a company that for decades was relied upon to help its customers assess risk, fell short when it came to managing its own. Management was not watching very closely, and if they were, they did not understand what they were seeing. (See Serious Money: The page on Buffett Part V: Company Management.)