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Bear Stearns & Goodbody, any Similarities?

Bear Stearns, whose stock value had a calamitous drop from 170 to 2, caused a whirlwind of emotions for investors and brought to mind other companies who have disappeared from view. These are the times of personal tragedies in the lives of the surviving employees and it could signal other trouble for companies in financial services. They are the loyal people who just did their jobs every day counting on the managers of the company they worked for to manage the assets of their firm in a proper way. The difficult part of this story is that a proper and complete explanation has never been given as to why Bear Stearns went from viable enterprise to bailout victim. This causes even more concern because the assumption is that other forces could still be undermining other financial concerns if the complete story is told. We have been told that the only US firms that were deemed even close to being capable of absorbing them were J P Morgan Chase and BankAmerica. This implies that all the other large banking and financial concerns have or had so much of their own problems that they could not shift their capital to take on a project the size of Bear Stearns.

The last time an event of this stature took place was in 1971, when the world's seventh largest firm, Goodbody, was so embroiled in back office problems, the SEC and the New York Stock Exchange took up a collection from all of its members and pushed Goodbody into the arms of Merrill Lynch. The asset bases were much smaller then but the cost and earnings dilution lasted many years during this absorption. Investors and advisors were constantly in discussion about what all this meant back then and as we see today, it takes someone my age to even remember this symmetrical event.

The reason I remember so clearly is that the manager of Cleveland's Goodbody office, Gus Harrison, became the sales manager of Merrill Lynch's E. 9th street office. He even dug out my application form from ten months earlier when I was rejected and called me about coming to work for Merrill Lynch. I explained that the Manager was not very impressed with me and I wondered why he thought I was such a good prospect. He convinced me that I was perfect for the task at hand and the rest is history as they say. My 34 year career may not have taken place without the demise of Goodbody and the subsequent management changes that brought Gus to Merrill Lynch. There may be many wonderful people from Bear Stearns who will be instrumental in working out God's will in the lives of other people. Try to look at the big issues of God's sovereignty even when it is hard to understand today!

Proverbs 2:10-11 ".for wisdom will come into your heart, and knowledge will be pleasant to your soul; discretion will watch over you; understanding will guard you."

As Christians, God calls us to be ready for the unexpected because the world will always be filled with changes that we cannot explain. But having knowledge of God's purposes will always help you in dealing with times of uncertainty.

Monday Morning Message Sent 4/07/08


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