The "Taking" of Bear Stearns

Was Bear Stearns improperly shut down and sold to Chase this past weekend?

Was there a more equitable process by which markets and counterparties could have been assured of the performance of Bear's book of positions, while providing for a competitive bidding environment on Bear's businesses and assets?

My partner is of the opinion that whatever Paulson, Bernanke & Co. decided to do by the opening of European markets on Monday morning, the explanation of it had to

"fit on a bumper sticker."

With which I agree.

Still, was if fair to indemnify Chase to the tune of $30B for agreeing to buy Bear Stearns? Why weren't Wells Fargo or Wachovia invited to bid on the same terms, with the same $30B guarantee?

Or, for that matter, a consortium of private equity firms?

Could not the Fed and Treasury have acceded to Schwartz's call to declare Chapter 11 bankruptcy, immediately move to name an official in charge of the process, and hire Chase or some other firm with trading facilities to operate Bear's book with loans backed by Fed guarantees? Then take a month to auction the pieces of Bear Stearns?

It seems to me to be a somewhat unlawful taking for the Fed and Treasury to have forced Bear to sell itself in an uncompetitive bidding situation.

Rather than bundle the financing of the firm with its purchase, it seems to me that Fed and Treasury officials could more easily have foreseen this type of meltdown. It's hardly unique, in that LTCM suffered the same type of margin calls and liquidity crisis when it failed ten years ago.

Somehow, giving Chase and Jamie Dimon a sweetheart deal for far less than they were reported to have bid, with a $30B loan guarantee gift is out of character in a 'private sector' solution.

No doubt there will be litigation about this in ensuing months. I'm not arguing for the shareholders getting more for the wreck of their firm. As equity owners, they are last in line, and, sadly, especially the one-third of owners who were also employees deserve what they get for not diversifying their investments from the source of their livelihood.

Rather, I am concerned, as a taxpayer, that the Fed has used my money to guarantee the value of assets involved in the takeover, but only by offering the sweetener to just one firm. Why not to any potential bidder?