Bear seizes collateral from Bear Fund

Jimmy Cayne must be shifting money from one pocket to another.

Bear Stearns Cos. said late Thursday that it seized assets from its High-Grade Structured Credit Strategies Fund after the hedge fund suffered huge losses in mortgage-backed securities and structured-finance markets.

The bank lent $1.6 billion to the hedge fund earlier this month after the losses. On Thursday Bear said that $1.3 billion of the loan remained. MarketWatch

This presumably protects Mama Bear from more pain, which for the most part has been limited to their reputation. But this wound is self-inflicted, and the sellers are finally getting to brokerage stocks, and Bear’s (BSC-NYSE) stock is the poorest performer by far over the past year. Ralph Cioffi will be out of a job soon, but walks with the bulk of his net worth intact. Scuttlebutt pegs him as having only 10% of his net worth in the game, he can comfortably live off the rest of his stash.  Sounds familiar, no?

Perhaps Bear will consider changing its electronic communication policy in the aftermath of this debacle.  Wall Street employees live in a closed system, shifting between Bloomberg, Bridge, First Call, Cap IQ etc, but they might want to get out of that loop occasionally and see what is going on in the real world.

All Cioffi et al had to do is read a few blogs or websites, and break out of the routine that dulled their senses, and minds. Reading Barry Ritholtz’s site might have been enough to save them billions.

Getting spoon fed by a bunch of people that look, walk and talk just like you won’t broaden your horizons. There is a big world out there full of information. Bear employees were cut off from it, due to compliance efforts that ban even Instant Messaging.

Bear might not fail, but Big Brother failed Bear.

And even Rich Marin would agree, it ain’t a pretty picture.

Bear seizes assets of its High-Grade hedge fund
MarketWatch
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