Those who do not learn from history...

are doomed to repeat it. The Bear Stearns story reminds me a lot of Enron's final days in a way. Both have executives saying everything was OK but seemed oblivious to market conditions and other issues surrounding their firms. Both faced liquidity issues and had lenders seem to lose confidence causing their stock price to have huge drops in short time frames. The government became a big player in the Enron case and seems to be stepping in that direction with the announcement that emergency funding from the Federal Reserve.

If you have never read Conspiracy of Fools I highly recommend it. Kurt Eichenwald's book is the fastest 660 page book I have ever read. The story of the collapse of Enron is similar in several ways to the Bear Stearns story from what I have read in my spare time about the situation.

I can only hope that Bear will be the only investment bank to go down. I happen to be employed indirectly by a similar firm to Bearand there are several rumors of the firm's liquidity issues out in the market. Although not as severe as Bear's situation, I think all investment banks with high exposure to the mortgage crisis will have someone question their liquidity in the next several weeks.

Sachse snow

Sike! Guess everyone else in the metroplex gets snow except for us. Sure have lots of rain, but it is funny to watch the news and see everyone freak out and leave work early. Funny stuff.

Interesting story about Sabanes Oxley

One of the reasons I got out of public accounting was the horrible law passed by Congress after the Enron debacle and other financial collapses in the late 90's/early 00's. This post on Dealbook I thought was pretty interesting regarding the decision of one company to delist its shares in order to attempt to avoid compliance with the law. It was by the company's estimate an attempt to save $750K in costs a year to comply with the law. However, some investors protested and the price of the stock dropped sharply.

To me, this shows two sides of this legislation. One, that the high cost to comply with these laws can be a big motivation to go private. Second, investors do like the transparency of financial reporting that comes with the law as evidenced by the drop in the stock price right away following the decision to delist. Somehow there has to be a happy medium to benefit both the needs of shareholders to know about their investment and the desire of management to reduce cost for the ultimate benefit of those shareholdings. I think this is an interesting paradox that as financial regulations become more complicated, at what cost is it worth to continue to comply?

I think the original authors of the legislation probably did not envision the results of the law for the long term, rather as politicians typically do, they just looked at the immediate benefits in the witch hunt following Enron. I definitely think this law should be reworked as to be more efficient in its application.

re: Texas Tech basketball

...oh yeah, we just beat the number 5 team in the country. 83-80. Don't you love being a fan of the most consistent team in the country?

A&M scored 10 points in the first half against OU on Saturday after blowing Tech out by 50. Weird.