Hi Gordon,

For your typical large financial institution, having lots of capital relative to supervisory standards does not mean much when the institution has a liquidity crisis. Supervisory capital requirements still allow a financial institution to be highly leveraged. The quote above from Cox regarding the level of Bear's capital does not appear to provide any support to back up what Schwartz said about the company's liquidity problems. Two different issues.

Regards - Bernie Sharfman

Hi Bernie. I get that distinction, and you make a nice point. It is certainly true that Schwartz seemed to be saying something more than "we are in compliance with supervisory standards."

But how much more? What was he saying, exactly? I imagined that it was something like this: "We should be able to weather any storms that we see on the horizon, unless the markets panic."

And if that's what he was saying, then Cox's letter provides some cover. Cox seems to be saying that it was the emotion of the moment, not the fundamentals, that did Bear in.

If you pay attention to the first video, it's clear that Cramer was thinking that he was talking about money on deposit with Bear, not it's stock.

But I can see in the context of everything, people would mistakenly think he's talking about the stock (since he normally talks about stocks and his producer flashed a chart of the stock price).

I agree with pwb. Watching the video the first time I assumed he was talking about the stock, but I think Cramer's defense is valid, not lame, after watching the video again. He was talking about deposits.

pwb and Jason,

Seriously? The person asking the question wrote about "liquidity," but that was the issue making equity holders jittery. At the end of the first video, Cramer says, "Bear Stearns is not in trouble. I mean, if anything, they're more likely to be taken over." Now, I concede that someone with deposits at Bear Stearns might care about a takeover if it would make the deposits more secure, but wouldn't the better advice to such a person be, "withdraw your money and put it in a more secure place!" Why would you risk deposits on the hope of a takeover? On the other hand, you would definitely mention a takeover to a common stockholder because that holds the potential for a big payday!

Also, notice that Cramer begins his defense by noting, "I said the common stock was worthless, on Friday, as soon as the thing was at 36." That's three days after the first video! Not sure what he is trying to say with that.

In any event, the purpose of my post was to suggest that his initial call may not have been as egregious as portrayed all over the internet. The fundamentals at Bear may have been stronger that it appeared when Morgan swooped in.

I just watched it a few more times and stand by my contention that both the questioner and Cramer were referring to "money/securities on deposit in Bear accounts" and not Bear stock. For me, the giveaway is the use of the phrase "move money" which is not typically used when talking about a stock.