Bloomberg reports that no one has come to help Bear Stearns rescue two of its hedge funds:
It was Bear Stearns, the biggest broker to hedge funds, that nine years ago declined to join 14 other investment banks in the bailout of Long-Term Capital Management LP. Then last week, as New York-based Bear Stearns pleaded for help to rescue two of its hedge funds teetering on the brink of collapse, many of the same firms refused to come to its aid.
Merrill Lynch & Co., which pumped $300 million into LTCM, said no and seized $850 million of bonds held as collateral for loans it had made to the funds. Lehman Brothers Holdings Inc., JPMorgan Chase & Co. and Cantor Fitzgerald LP also pulled out, leaving Bear Stearns to sort through the wreckage of bad bets on subprime mortgage bonds and collateralized debt obligations.
Bear Stearns is using $3.2 billion of its own to salvage the situation. All I can say is that Bear Stearns made a huge mistake when they refused to follow the crowd in bailing out LTCM nine years ago. It came back to bite them in the ass.
0 Responses to “What Goes Around Comes Around”