Ralph Cioffi still seems to be getting along with Bear Stearns, according to forms the bank filed in connection with his termination. The former money manager was forced out of the bank after the two hedge funds he managed crashed and burned after making a series of wrong-way bets on subprime linked assets. Bear Stearns is now under investigation by federal prosecutors and investors in the hedge fund are suing, but in the termination form filed with security industry regulators Bear Stearns had nothing negative to say about Cioffi.

The NASD requires member firms to fill out a termination form, called Form U-5, whenever a registered employee is let go, explaining the reason for the termination. Wall Street firms have been known to use Form U-5s to smear departing employees who leave on acrimonious terms. Partial immunity to lawsuits for the contents of the Form U-5 encourages nastiness. But Bear's filing on Cioffi is very polite, which is raising some eyebrows.

"Bear Stearns clearly wanted an amicable departure," Jake Zamansky writes. "Often when firms are under investigation they look to scapegoat others. In this instance, Bear Stearns has a strong interest in keeping Cioffi 'on-the-reservation' given the firm's exposure to allegations of fraud in criminal and civil proceedings. The firm stands to benefit so long as their interest and Cioffi's are aligned. Therefore Bear Stearns doesn't have any incentive to include 'negative' disclosures which could shed light into how the hedge funds collapsed."

Bear Stearns & Ralph Cioffi: Breaking Up is Hard to Do [Jake Zamansky]

Bear Stearns has more than $1 billion of short positions on subprime, up $400 million from the end of November, Bloomberg reports. Of course, since Bear Stearns got the subprime trade so wildly wrong last year, people are already wondering if this might be a signal that it is time to go long subrime.

Over at The Big Picture, Barry Ritzholz writes, “While I do not expect us to be done with the subprime slime yet, I do get a ‘Is this a bottom indicator?’ sense from Bear on this.”

JPMorgan Chase, which emerged relatively unscathed from the credit market debacle, is apparently taking the opposite position. Yesterday Jamie Dimon was reported to have said that the bank plans to expand its role in the subprime mortgage business. Goldman is also rumored to have reversed it’s position on subprime, taking a net long position.

Bear Stearns Is `Short' Subprime Mortgages $1 Billion [Bloomberg]

The Justice Department has questioned former Bear Stearns asset management chief Rich Marin in its inquiry into the failed hedge funds at Bear Stearns, CNBC's Charlie Gasparino reported this afternoon. The Justice Department is seriously considering criminal indictments, possibly including an indictment of Bear Stearns itself. The Justice Department has been loathe to indict entire companies in recent years after its indictment of Arthur Anderson led to the collapse of the accounting firm.

Marin ran the division that managed the two hedge funds, and formally took control of the funds when they began to fail last summer. At the time, he described his actions in heroic terms.

“This pretty much sums up my last two weeks trying to defend Sparta against the Persians hordes of Wall Street,” Marin wrote on his personal blog. “Nothing like a good dog fight 24X7 for a few weeks to remind you why you chose the life you chose. The good news is that after two embattled weeks both I and my loyal staff are still standing to fight another day. If you want details....pick up any WSJ for the past week and we were in the top three stories every day. It's nice to know you can have an impact on the world....next time I'll try to make it a slightly more positive impact.”

The day after his blog was discovered by the media, Marin was replaced at Bear Stearns and the blog taken down. But he still has a profile on blogger. His profile describes Marin as a 54 year old Aquarius who likes the poker movie Rounders, is a fan of singer Meatloaf and lists Things Fall Apart and The Great Gatsby as his favorite books.

Credit Suisse is totally not going steady with Bear Stearns. Ruddy Brady Dougan—the Irishman who is somehow chief executive of the Swiss bank—told Credit Suisse bankers at the meeting of the Committee To Run The World in Davos, Switzerland that a deal to acquire Bear Stearns is a “non-starter,” according to Mark DeCambre at TheStreet.com.

But now everyone is awkward about it. Bear spokespeople decline to comment, look away embarrassed. The Swiss aren’t talking either, just staring down at their shoes mumbling about already having plans and such.

Credit Suisse CEO Squashes Bear Stearns Takeout Talk [TheStreet.Com]

So who is on this list of 14 companies under investigation by the FBI for their involvement in the subprime mortgage crisis? The FBI apparently intends to keep us in suspense because they won’t give details. All we know is that they are looking into “allegations of fraud at various stages of the mortgage process, from companies that bundled the loans into securities to the banks that ended up holding them.”

So let’s recklessly speculate. Two companies that are sure to be on the list are Bear Stearns—which is already under investigation by federal prosecutors and the SEC—and Countrywide, which is both the biggest home loan lender and also facing an SEC inquiry. Goldman Sachs is very likely on the list. It was accused on the pages of the Sunday New York Times of misleading clients by packaging CDOs while shorting the mortgage market. We know that at least one Senator read the article and has been making a stink, and we know that federal investigators often get their leads by reading the paper. What’s more, Goldman Sachs has said that it is cooperating with an unnamed government agency.

Morgan Stanley has also admitted to cooperating with unnamed government authorities. At first, everyone assumed this was the SEC. But why wouldn’t they come out and say that? More likely they declined to name the agency out of fear that saying they were cooperating with the FBI would tar them with serious criminality—rather than the everyday Wall Street shenanigans implied by an SEC investigation.

So that gives us four good leads. Who else is a cylon on the list? No doubt some additional mortgage companies and some home builders. Maybe the ratings agencies are also. Leave your guesses in the comments section below.

FBI Launches Subprime Probe [Wall Street Journal]

Now hear this Alan Schwartz. John Thain knows how to play this game, he studied at school of GSBS and he's got a Ph.D. Merrill Lynch is taking a $15 billion write down. You see that, that's called covering your ass. Analysts expected a $12 bn write down, but Thain said "No No" you have not lowered your expectations enough. So now he only has to live up to his newly self-lowered expectations Alan. Get that, UPOD. U "Under" "P" Promise "O" Over "D" Deliver. Do what Johny Thain does. Don't be a hero. Take the write downs now.

--Everett Stuckey, DealBreaker's advisor to newly minted CEOs.

Well its come to this. Another great Wall Street firm may go the way of the Dodo, selling itself to a hedge fund. According to the Financial Times, Bear met with both Fortress and Avenue Capital but talks fell through. All we can say is we hope they sell to Avenue. What better than to have Chelsea, and by extension Hillary, Clinton running things. If they sold to Fortress, well then what would that leave us, John Edwards? If either one of these accounts are true, it seems desperate. Let us make this suggestion instead, call up the head of Bear Stearns Merchant Banking (We hear they're a pretty good shop) and LBO yourself. That way you won't be dancing to HRC's tune.

--Everett Stuckey, DealBreaker correspondent.

Bear and Fortress held tie-up talks [Financial Times]

Lots of others in the business news media want to interview Alan Schwartz, the new head of Bear Stearns. We just want to tell him what to do. They can only report. We get to decide.

Look. Alan let us tell you a story. When Kruschev was forced out as Premier of the USSR, he sat down and wrote two letters to his successor. The outside of the first letter said "open this the first time you get into a situation that you can't get yourself out of.” Soon enough the new Premier got himself into a sticky situation. So, he opened the first letter from Kruschev and it said "Blame every thing on me.” So the new Premier did, and it worked like a charm and he was back up on his feet. Pretty soon though, he got himself into another mess and so he opened the second letter from Kruschev, it said "Sit down and write two letters".

So you see Alan, you're in that first golden period. Write down everything on your books that even possibly hints of nonperformance. Because right now, you can just blame everything on Jimmy Cayne. But if you don't take the write downs, and you miss your numbers later on... well then you'll need to sit down and write two letters.

Also, for Bear Stearns investors, you might want to take this advice into account. If the new boss has a clue about how to run things, we’re likely to see more write-downs and hedge fund collapses. Does anyone know if there are any more of these funds full-up with asset-backed securities hiding in the bathrooms at Bear? They don’t return our calls these days, so we’re not even bothering to call them.

--Everett Stuckey, DealBreaker correspondent.

So Alan Schwartz took some time away from his victory lap to sit down with David Faber yesterday afternoon. And being the crack business journalist that he is Faber got Schwartz to spill the beans on the turn around plan for Bear Stearns. It includes "execute", take advantage of "market opportunities" and "don't fuck up as much". Schwartz also claims Bear is over capitalized. And by over capitalized, I assume he means "not currently bankrupt."

Since Charlie Gasparino has been all over this story from day one—as long by "day one" you mean that day back in December when he broke the story that the board was looking for a successor to Jimmy Cayne—we wondered why he didn’t get tapped to interview Schwartz. Surely Gasparino has a more intimate knowledge of the situation and could therefore ask more salient questions. We assume Schwartz’s pride is still hurting from all of the Wall Street Journals references to Bear's "Small but respected" investment banking department—no man likes anything about him to be referred to as “small but respected”—and so he might have been a bit sensitive about who he would talk to at “America’s Business Network.”

So we decided to ask CNBC about how the Schwartz interview became a Faber Report. Did Bear Stearns request Faber? Did CNBC choose Faber? Of course, CNBC wouldn’t comment on internal editorial matters. Gasparino says he has no idea how the interview was set up. Bear Stearns told us they would call us back but never did. They totally hate us.

Also, Schwartz claims Bear plans no future write downs due to the current "credit crisis". Listen Alan, TAKE THE WRITE DOWNS. You only get one chance like this. Write everything down. Then if the mark downs were unnecessary mark the positions back up slowly each quarter to pad your freaking numbers, son. What have you been doing all month if it wasn’t learning how this game is played?

--Everett Stuckey, DealBreaker correspondent.

Is it too early to get nostalgic for Jimmy Cayne? He was a dream chief executive for those of us who worry that Wall Street may be getting a bit too buttoned-down, populated by cubicles full of gunners with Ivy League degrees who lack even the sense of confident entitlement that such pieces of paper once promised. Even while the credit markets crushed two funds bearing his firm's name, Cayne was providing fodder for headline writers to make puns about the funds going "up in smoke." Somehow we doubt Alan Schwartz is going to be anywhere near that much fun.

These reflections were prompted this morning by the news that a third Bear Stearns fund, known as the Bear Stearns Asset Backed Securities Fund, was going to be shuttered. As recently as August, BSABS held $900 million in assets. Now it is returning $90 million to investors, with promises to return a bit more once it finds a way to sell assets it thinks might be worth, well, something. Fingers crossed!

In retrospect, B.S. ABS may not have been the most auspicious initials for a hedge fund.

Bear Stearns Shuts Asset-Backed Hedge Fund After Loss [Bloomberg]

As long time readers of DealBreaker know, our site is blocked by Bear Stearns. Alone among Wall Street firms, Bear Stearns refuses to let its employees—at least those in the New York offices—read DealBreaker. It seems strange that any financial firm would want to cut its employees off from commentary and information—however irreverent and occasionally smutty—available to its competitors. But that’s what Bear Stearns has done.

We never got a satisfactory answer from Bear Stearns about why they had decided to jam the signal from DealBreaker’s bunker. Was it in retaliation for something we had written about the firm? Did we pay too much attention to the collapse of those hedge funds? Or was it the golfing and the dope smoking? Maybe Bess Levin was just too edgy for the famously delicate sensibilities of Bear’s bond traders.

We were told, at some point, that Bear had blocked us because our comments section was a breach of their internal confidentiality controls. They block every site that allows comments, Bear claimed. But this just isn’t true. You can comment on the Wall Street Journal’s DealJournal and on the New York Times’ DealBook. Neither the Times nor the Journal are blocked. So there must be something special about DealBreaker.

Whatever it is, Bear wasn’t willing to share. We tried raising this scandal to higher-ups at Bear but the management was, it seems, too “hands off” to get involved with what everyone kept telling us was an IT issue. So, with a new CEO taking office, we’re asking: Will Bear Stearns unblock DealBreaker? Or will they at least provide a credible answer about why they block us?

We won’t go through the litany of stories we’ve broken on this site or the market moving rumors we’ve been the first to make public. But we will say that we’re not exactly inspired by the competence of a firm that thinks it’s a good idea to make employees wait to hear the word on the street from someone who picks it up from DealBreaker a day or two later. Also, it hurts our feelings. We're here, risking our lives each and every day, for our readers. Blocking the site just seems rude. If the new CEO wants to make a splash, he might start by removing this weird dam in flow of information to Bear Stearns.

Come on, Alan. What are you afraid of?

Bear Stearns issued a press release this morning last night, basically telling everyone everything we already know. Jimmy Cayne is out as chief executive but remains chairman. Alan Schwartz gets CEO spot.

So what's the deal with Schwartz. News accounts depict him as well-liked and trusted, and he insists he is more than just an investment banker. He's supposedly spent the last month boning up on the various businesses of Bear Stearns. But his greatest strength may actually arise from his investment banking experience advising corporate leaders who are fending off bids from corporate raiders, unsolicited buyers and activist shareholders. If Bear Stearns thinks that it might come under fire from, say, Joe Lewis (who now owns 9% of the company) or become the target of an unwanted buyout offer, the selection of Schwartz makes perfect sense.

This might also explain why shares in Bear Stears continued to fall after the announcement, as any buyout premium in the 9.7 billion company has surely been snuffed out by the selection of Schwartz. If anything, the talk is now about what Schwartz might buy rather than who might buy Bear Stearns.

After the jump, read the entire press release.

Still NSFW. Still worth getting fired over (you can have Ron Blarney's job).

The people familiar with the matter have spoken once more, which can only mean one thing: another Wall Street chief is headed for the executioners block. The Wall Street Journal's Kate Kelly is reporting that Jimmy Cayne has started notifying to board Bear Stearns that he plans to give up the CEO desk while remaining chairman. Alan Schwartz is expected take over.

More tomorrow morning.

Bear CEO Expected to Step Down But Remain in Chairman Post [Wall Street Journal]

Money managers may start to move their business away from Bear Stearns, according to a low-profile manager of a large investment fund. He tells us that he is pulling away from doing business with Bear Stearns and that casual conversations with colleagues indicate that others may be making similar moves.

Bear Stearns has turned off some money managers with what sometimes appears to be a cavalier attitude towards lenders and other counter-parties. Today the Wall Street Journal reported that Barclay’s was suing Bear Stearns after two funds to which the British bank had lent money collapsed, leaving Barclays with holding the bag. Bear’s response—basically that Barclays should have known that it was risky to lend to the funds—has not endeared fund managers to Bear.

“They bragged about not having the firm’s money in the funds that had their name on it, and then told creditors to take a flying leap,” the fund manager said. “They’re a toxic counter-party. I don’t want them involved in any of my trades, in any way.”

Bear also owned a significant minority stake in ACA, the small bond insurer downgraded yesterday by Standard & Poor’s. Although Bear didn’t have a managerial role in ACA, it’s potential collapse does not sit well with some managers already wary of what the fund manager who spoke to DealBreaker called “the Bear curse.”

“To me, the report that their losses weren’t as bad as they might have been is just another stick in the eye to investors in their funds and counter-parties who lost money with these guys. I’m sure their shareholders are happy,” he said. “But let’s see how happy they are when Bear starts to lose business. People think reputational risk is hooey. Well, they’ll see.”

We didn’t contact Bear Stearns about this story because they still haven’t given us a reasonable explanation for why they blocked DealBreaker. So we’re counter-blocking them by not asking them to tell us they won’t comment on the story.

Update: More on the decline of Bear Stearn's prime brokerage business from the Financial Times. "Bear’s decline in prime brokerage began about three years ago and has been accelerated by its recent mortgage-related troubles, including the collapse of two hedge funds run by the bank’s asset management division," write Ben White and Deborah Brewster. "The troubles have raised questions about its financial stability."

Bear Stearns lost a bunch of money ($854 million, $6.90/share) in the fourth quarter, and is being sued by Barclays for allegedly starting a hedge fund in 2006 in order to offload the risky assets in another of its hedge funds that'd it lost interest in making profitable. Bear CEO James Cayne, bless his heart, is said to "not care less" about either piece of news, though a speech writer for Wall Street's Favorite junkie came up with this line, "We are obviously upset with our 2007 results," and attributed it to the guy. As an aside, I would just like to say that that I was not kidding about that thing I mentioned yesterday:

CNBC's Charlie Gasparino informs me that when he reported that Bear Stearns is holding talks to decide whether they're going to get behind Wall Street's favorite junkie or not, he was "hung over, not drunk." Meaning there's a chance JC really could get fired. I'm still choosing to say, "No, I don't believe it," but now, there's a quiver in my voice. Stay tuned.

Earlier: Please Say Charlie Gasparino Is Drunk And Making Shit Up, Please Say Charlie Gasparino Is Drunk And Making Shit Up

CNBC reports that Bear Stearns's board has been holding informal meetings in the 383 Madison Ave. 14th floor men's room to discuss replacing BSC CEO Jimmy Cayne. None of us here understand why something like this would happen! and therefore choose to believe it's not true. We're not going to add another thing to this smear campaign until Englewood Cliff's produces a body. We're just going to lay down on the floor of the DB HQs, get into the fetal position and light up. And maybe cry, though that doesn't have anything to do with this post, it has to do with Britney Spears's 16 year-old sister being pregnant. So in a sense, I guess you could say, yeah, it does have to do with this post.

Bear Stearns Looking for Cayne Successor [CNBC]

Each day without the name Bear Stearns in the headline must be a relief for Jimmy Cayne. And today Jimmy might need to blaze up a bit more than usual because Bear is back in the headlines.

The worst year ever for the once mighty trading house just got a bit worse. Business Week has uncovered a probe by the Securities & Exchange Commission and the US Attorney’s office in Brooklyn into allegations that Bear Stearns insiders pulled their own money out of Bear Stearns funds while the funds managers were urging investors to hold fast and weather the storm.

And as if that weren’t enough, the collapse of the High Grade Structured Credit Strategies and High Grade Structured Credit Strategies Enhanced Leverage funds are still sending shockwaves through Bear Stearns.
“In recent weeks, BSAM has begun notifying investors in the Bear Stearns Multi-Strategy Fund that it plans to liquidate that $100 million investment vehicle. The fund, which only invested in Bear-managed hedge funds, put several million dollars in the Cioffi-led funds,” Business Week reports.

Probe of Insider Trading at Bear Stearns [Business Week]

Before we send this off into the universe, I would just like to note a few things. First, what we're about to show you is horrifically immature, and if it's meant to be a joke, will probably only succeed in getting our 12 year-old boy readers to laugh, and probably only half of them at that. Second, we've received it from no fewer than twenty people meaning maybe, fingers crossed, I'm not sure in which direction, that it's real. Third, that it's NSFW, unless you work in an environment that's unusually accepting of you watching videos featuring scantily clad old white men. And last, that I believe it to be an impostor who's a good 20 pounds heavier than the real thing. But since I've never seen the big guy without his shirt on, I leave it to you: is this Jimmy Cayne?

It’s no secret that Jimmy Cayne’s fear of the media has increased three-fold since the Journal’s hit on his drug problem came out, and he began dramatically increasing the amount of PCP he was lacing his pot with supposedly as a coping mechanism but really just for fun. It’s also no secret that Jimmy Cayne isn’t terribly concerned about the credit crisis situation, and its various effects on humans and shellfish, which, most significantly for people, is the death of courtesanship, and for crabs who in better times would’ve been eaten by Stephen Schwarzman, longer life spans. Not concerned that is, until things start to hit a little too close to home.

We’re referring, of course, to the increasingly weak dollar’s impingement on Cayne’s ability to get high. Speaking to the Post on the promise of anonymity, Cayne told Page Six that “Most of the high-end marijuana sold here comes from Canada. With the Canadian dollar becoming more valuable against the US dollar, the dealers have had to raise prices about 25 percent, [and in some cases, by a whopping 50, making me RUE the day I enrolled my guy in night econ classes at Baruch College.]” What’s more, he got screwed royally last week while buying some chips during the intermission of a Pink Floyd laser light show in London due to the pound’s assault on the dollar, and because he didn’t realize that an order of chips to the Brits is a basket of fries. A source—named Carney, who was hiding in the brush the whole time—tells Dealbreaker that Cayne was so angry he barked, “This is why I never go to the theater” and tried to storm out in a huff but couldn’t find the exit. The bottom line is that something has to be done stat, or Jimmy’s going to follow-through on his threats to “do something drastic,” like kidnap Ben Bernanke and tickle-torture him ‘til he makes things right, or, more probably, develop an addiction to Oxycontin.

Stoners Suffer [NYP]

Ralph Cioffi, the portfolio manager of the two Bear Stearns Asset Management hedge funds that collapsed in June, has been quietly attempting to put together another fixed-income hedge fund, Roddy Boyd of The New York Post reported this morning.

His biggest obstacle?

If you said, "Investors pissed off that he lost all their money" you clearly haven't been paying attention. These days hedge fund failure might not quite mean never having to say you are sorry but it certainly doesn't mean you'll never eat lunch at San Pietro again.

Apparently Cioffi's biggest problem is that has been working as a consultant at Bear Stearns and they don't want to let him go. According to Boyd, they are using his millions of restricted stock to try to persuade him to stay on.

Welcome to Wall Street, 2007. You can take losses any time you like, but you can never leave.

Crushing Bear Hug For Hedge Fund Honcho [New York Post]

In an effort to "best position Bear Stearns for 2008 and beyond," which is the year it plans to "really start making this thing work," the securities firm will be laying off 650 employees. Ex-Bears will be given (probably uncompetitive) severance, benefits (that don't include dental) and outplacement services (with the majority of firees expected to land on their feet working as editors on the Think Equity blog).* In a remarkable show of compassion, James Cayne is said to have sent out a desperate e-mail to the members of the board early this morning, urging them to reconsider the drastic measure, on account of the fact that the staff reduction would translate to much fewer people for him to go in on 1/8ths with, and in Jimbo's words, "I don't have that kind of money right now." After being reminded that the layoffs had been an idea he had come up with on his own, after returning from a super frustrating smoking session in which he got a measly two hits before the spliff ran out because there were "like 30 people there" and "some first year fuck kept Bogarting the shit," Cayne, who had to read the reply six times before being able to process the information, responded, "Oh yeah. Ok, fuck it, get rid of them."

Bear Stearns Cuts 4 Percent of Staff [AP]

*actually, we don't know if any of these specs are true, we're just assuming. Got any info? Feel free to share.

Some guy whose money Bear Stearns lost sued the securities firm this week. Samuel Cohen (of the Baltimore Cohens) is accusing BS and its top execs of "recklessly" buying up billions in subprime loans and trying to hide its "tremendously risky subprime mortgage portfolio" from those who might have a vested interest in it by not so much lying but maybe "overstating" how it was doing. (Lying.) This all seems very three months ago to us, but we get that Cohen might feel differently.

In addition to seeking damages, Sam has said that he wants to see Bear Stearns implement better corporate governance practices, which could include, he suggests, splitting the chairman and CEO roles. We like this because what's a little lost money to Bear Stearns? Not such a big deal, it happens all the time. They pay this guy (really his company because it's a derivative lawsuit but that's not the point) and move on, relatively embarassment-free. The part about (*basically*) asking for James Cayne to be fired, or have his responsibilities significantly lightened adds a little bit of public shame we really appreciate.

Granted, Cayne would probably secretly love this, and is perhaps even in Cahoots with Cohen ("I don't think we should add that to the suit, can't I just ask for money?" "No, just do it!") but whatever. In other news, Fortune may soon be blocked at Bear because of the latest cover featuring Cayne and a bunch of CEOs who lost a ton of money, asking "What were they smoking?" (The special insert with commentary by L.Craig was apparently the breaking point, according to a BS spokesman.)

Bear, AIG Sued Over Subprime Exposure [NYP]

We’ve been digging deeper into how DealBreaker got blocked on the computers at Bear Stearns. We’ve finally learned the truth and it’s totally shocking.

DealBreaker didn’t get blocked because Bear Stearns wanted to censor our content, according to Bear Stearns. It wasn’t Bess Levin’s harping on golf, sex, drugs and cards. It wasn’t Opening Bell’s hatred of red apples. It wasn’t even our controversial stand on proxy access. And, even more shockingly, it wasn’t the dirty minds and mouths of some of our loyal commenters.

Bear Stearns has apparently blocked DealBreaker because they are afraid of their own employees. The company tries to block any website that allows its employees to speak out of turn. Facebook and Microsoft’s Hotmail are also said to be blocked in compliance with this policy. Bear Stearns has its baby bears on lockdown, unable to reach out to the outside world via the interweb. So DealBreaker’s commenting feature is what go us blocked, apparently.

When we learned this from Bear Stearns we had the distinct feeling that it was intended to make us feel better. “It’s not you. It’s me,” they were saying. But they underestimate the depth of our paranoia. After all, if they aren’t targeting us, why is DealBreaker blocked while some other prominent business websites that permit comments, including the New York Times’ DealBook, are not? Somehow we’re not convinced Bear’s desire to control their own employees is the entire story here.

But we have good news for our beleaguered Bear Stearns readers. You can still read DealBreaker by subscribing to our RSS feed. You can also subscribe to our daily newsletter by using that nifty little button on the left side of your screen.

First, the securities firm announces it’s only going to writedown $1.2 billion in the fourth-quarter because of some bad luck in the mortgage market, beating Creditsights analyst David Hendler’s expectation of $3.2 billion. Strange, we thought, but okay, it’s not like they can’t come back tomorrow or next week and say, “JK, we actually meant $12 billion,” Merrill does it all the time. Then Chief Financial Officer Sam Molinaro says that the firm that loves subprime, that can’t get enough o’ subprime, that has, historically, had such a sick and twisted fetish for subprime that the pictures illustrating Bear’s perversion for subprime on Rich Marin’s blog were deemed NSFW (and ultimately contributed to http://whimofiron.blogspot.com being blocked by BSC), is now short subprime. Hedge fund balances are “coming back,” as are customers, and the second-worst performing stock is up. Health code inspections are being passed, due in no small part to the fact that not one piece of human waste can currently be found on the equity trading floor on 5th, where, apparently, you can barely detect the aroma of rotting fish anymore. JIMMY CAYNE IS AT THE OFFICE. Sure, he’s only there because he’s frantically trying to find the bag of White Widow he stashed “somewhere between the lobby and the 14th floor men’s room” before his flight to Tennessee departs at noon (two week of bridge camp, count it), but, still, he’s there!

Bear Stearns to Take $1.2 Billion Subprime Writedown [Bloomberg]
Bear Stearns Expects Write-Down Of $1.2 Billion in Fourth Quarter [WSJ]

We’ve now confirmed that Bear Stearns has blocked employees from reading DealBreaker. After several phone calls to Bear Stearns, we’ve been unable to learn who made this decision and why it was made.

We began with the assumption that the blocking was an oversight. It seemed unbelievable that Bear would want to cut its employees off from the information DealBreaker provides each day. We realize that a lot of our readers drop by for some of our racier and more pure entertainment content. But a good amount of our readers also come for some more serious content—news about the latest development on the super SIV fund we call The Entity, analysis of backdating and shareholder access proposals, legal developments affecting Wall Street, layoffs and bonuses. Just last week we were the first to print the now widespread impression that the surprising stock market movements appeared to be caused to a major hedge fund liquidating certain positions.

Could it be something more? Could Bear think its employees, investors and clients are better off with less knowledge about this stuff than more? That didn’t make sense. We figured it was some monkey in the IT department or perhaps even some third-party blocker software that didn’t like all our references to some of the racier elements of life on Wall Street. (Which is kind of unfair. Sure we write about smoking dope—but Bear Stearns Jimmy Cayne is widely believed to actually smoke dope. Is writing about it worse than doing it?)

But Bear’s refusal to provide a plausible explanation—indeed, even to respond to our requests for information—raises a darker possibility: Bear Stearns might be retaliating against DealBreaker for reporting on fixed-income losses and executive high-jinx. If that’s so, it would be highly ironic since most of our work in this field has been emphasis and aggregation—pointing toward buried ledes in the Wall Street Journal or aggregating diverse resources to draw a fuller picture of the company. Surely if DealBreaker gets banned for writing about Cayne’s golf and smoking, the Wall Street Journal should be banned too. But they’d never get away with that. Banning DealBreaker is easier.

It’s still possible we’ve been banned by accident and not out of fear. But we’re tired of wondering, tired of being ignored by Bear's PR department and, frankly, we miss our loyal readers at Bear Stearns. So we’re giving Bear a chance to explain itself publicly here. Who banned DealBreaker and why? Send us an email (tips@dealbreaker.com) or call us at 212-334-1871.

By now it’s been confirmed that Bear Stearns is enforcing martial law on its employees’ ability to access the subversive information found at Wall Street tabloid DealBreaker.com. At one point earlier in the year, a unit at Merrill Lynch had imposed the same fascist policy, but later reconsidered the wisdom of having its traders work with less information (about Jeffrey Epstein’s predilection for transsexuals) rather than more (which could be directly related to the firm’s recent money troubles). We’re told, by people who think they know, that despite what I promise will be our best efforts to publicly shame Bear into unblocking DB, the firm will never lift the ban. Fine, whatever, we’re still going to try (lot of time on our hands at the DB HQs). First, though, let’s get to the root of the issue:

From the text line:

Bear is blocking Dealbreaker but Above the Law is still open. I agree that all the bathroom talk must have been the last straw. Fortunately, I can still read Dealbreaker on my cell phone. Btw, I have a great story to tell you from back in August how someone at Bear nearly caused a catastrophe by manually pricing Bear’s stock at the end of the day as $1.15 instead of $115.

Another employee informs us that "those with RSS can still read."

A loyal reader this morning tells us that Bear Stearns--apparently attempting to cement its reputation as the most paranoid bank on Wall Street--has blocked our website. We're trying to get to the bottom of this now. Clearly we provide important and up-to-date news that Bear Stearns employees need to know in order to get their jobs done. So this must be some kind of mistake.

But if it is true, it makes us wonder exactly what Bear was afraid its employees would find out by reading DealBreaker.

If you are reading this from Bear, please leave a comment below.

As a bank of normal intellectual capacity, Goldman Sachs is sort of unfairly taking home the title of most profitable securities firm in the U.S., as result of having snuck into the Special Olympics of making money and smoking the competition. But whatevs, they did, and now they’ve set aside $16.9 billion to pay salaries, benefits and bonuses in the first nine months of 2007. Bloomberg points out that since Bear Stearns’s market cap is $14.7 billion, Goldman employees could buy Bear, and still have money left over for snacks. Yes, those catty Bloomberg bitches went there. But mudslinging aside, what would the Masters of the Universe do with the bank at 383 Madison, presuming they’re not too squeamish to enter a building so filthy that new employees are given information regarding how to treat everything from scabies to staph on their first days of work? Some ideas that have been floating around the GS bullpen inc