Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Nye Lavalle
Bear CEO Expected to Step Down
But Remain in Chairman Post
January 7, 2008 7:14 p.m.
James Cayne, the chairman and chief executive of Bear Stearns Cos., under fire from shareholders after the Wall Street firm was badly burned by the downturn in the mortgage market, is stepping down as CEO, say people familiar with the matter.

Mr. Cayne, who was named CEO in 1993, acquired a reputation last year for being a hands-off leader as the current credit crisis unfolded. Yesterday, he started notifying the board that he plans to relinquish his CEO post but remain as chairman, say these people. Mr. Cayne is expected to be succeeded by Bear President Alan Schwartz, a 57-year-old investment banker respected for his deal-making savvy.

Mr. Cayne, who turns 74 years old on Feb. 14, didn't return a phone call seeking comment.

The discussions of Mr. Cayne's fate come as Bear Stearns shares hover near a four-year low, reflecting investor concerns that the company hasn't seen the worst of the fallout from the credit crunch. With the nation's mortgage market floundering, it isn't clear how the firm, a big maker and trader of mortgages and mortgage-related investments, will compensate for huge revenue losses in those businesses, casting doubt on its earnings prospects.

While most financial stocks have been badly hurt by the credit crunch, Bear Stearns has been particularly hard hit. In 4 p.m. composite trading on the New York Stock Exchange, its shares fell $2.62, or 3.3%, to $76.25, well below its 52-week high a year ago of $172.61. Since the start of the new year alone, the stock has fallen 14%, alarming some longtime shareholders.

Bear Stearns wouldn't be the first major investment bank to replace its CEO over setbacks in the credit markets. In the past several months, Citigroup Inc., Merrill Lynch & Co., and UBS AG have unseated their chiefs after reporting heavy losses on soured mortgage-related bets.
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Shaggy Rogers

As You CEO, So Shall You Reap

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What gets lost in all of this turmoil in the executive suites is the fact that the engineers of this system have taken the fast track to perpetual comfortable wealth no matter what happens behind them. And along the way, they acquired the resources that kept the legislators under control to assure it wouldn't be interfered with.

Their alleged losses are on paper.

Cayne can't possibly spend himself or his heirs into personal insolvency. CEOs have learned their Sarbanes-Oxley lessons from Enron.

And the Bear Stearns executives who positioned themsleves and their assets properly are toasting themselves into perpetual comfort even as the fallout drifts downward. Their only regret is the schemes didn't last longer and further expand their fortunes.  The difference is basically not caring about a $10,000 wine tab at some international hotel versus caring about how to split a $500 dinner tab for four in at the country club. The rest of us pick up our own checks at domestic chain joints or hope there's enough left on the card to get through the line at the grocery store in the last week before the paycheck hits.

The clever will always survive as long as they have the clever in power.

But that is nothing new, and it has NOTHING to do with the basement-level EMC employees telling borrowers all kinds of lies while they're trying to move up the ladder to heir own solvency.

Bear's problems aren't going to save victims of EMC Mortgage's servicing schemes. The EMC employees could care less about Bear's problems. They are trained to get their's for their employer.

Burn that into your brain if EMC handles your mortgage.  Even if Bear were to become the next Enron, the loan portfolios are assets that would wind up being serviced by the highest bidder, and they'd simply take whatever EMC's computers said about your loan as gospel.

Focus people.

I've said this often, but posts here get rolled off all-too quickly: When it comes to your home, fight where you stand. The war on the other side of the continent with stories about Bear Stearns won't stop a bullet fired from the EMC guy a hundred yards away.

They are hunting to avoid being in your position.


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I wholeheartedly agree with you.  You do a public service making that point here.  We can not be deluded into thinking CEO exits will make a difference
for those currently battling MSF issues as they try to prevent their homes from being stolen. 

It is comforting to know that Cayne, Cioffi and others are not exempt from prosecution.
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Shaggy Rogers

Bear Stearns May Become Takeover Target Amid Unrest

Tue Jan 8, 2008 3:00pm EST

By Jessica Hall

PHILADELPHIA (Reuters) - Bear Stearns Cos Inc's (BSC.N: Quote, Profile, Research) management shake-up could make the investment bank a takeover target, but the possibility of more write-downs and chance of legal entanglements from the subprime mortgage crisis could sideline suitors for now, analysts said on Tuesday.

Bear Stearns' president Alan Schwartz is expected to replace James Cayne as chief executive, but Cayne would remain chairman, according to media reports. Bear Stearns could not be reached for comment.

Appointing Schwartz, a 57-year-old investment banker, could signal Bear Stearns' willingness to entertain offers, even as its shares hover near four-year lows, some analysts said.

Cayne has been under fire since two Bear-run hedge funds collapsed last summer. Bear Stearns also had its first loss ever in the fourth quarter because of subprime mortgages.

"Periods of instability always create opportunity for those who are willing to do the proper homework and be dispassionate in the risk-versus-reward review," said one investment banker, who declined to be named.

Cayne would follow other heavyweight casualties on Wall Street, including former Citigroup Inc Chairman Charles Prince and Merrill Lynch & Co's Stanley O'Neal, who were forced out after their companies had large subprime write-downs.

Bear Stearns, with market capitalization of about $9.1 billion, trades at about 8.5 times fiscal 2008 earnings estimates, less than half the financial sector average of 17.4 times earnings.

"Outsiders may now be attempting to take control of the company. He must fight this off," said Richard Bove, an analyst with Punk Ziegel & Co.

"The firm will be enmeshed in meaningful legal battles for the next 3 to 5 years over its alleged missteps in the credit sector. Management is entrenched and must be overhauled," Bove said.


Schwartz joined Bear Stearns in 1976 after an injury prevented him from becoming a professional baseball player with the Cincinnati Reds, according to media reports.

He has served in various roles at the company, including investment strategist and head of investment banking. He became co-president in 2001, then president when co-president Warren Spector stepped down last summer.

"He's a very methodical leader. He's the type of guy who will work with every unit to have it going in the right direction," said James O'Shaughnessy, chairman and CEO of O'Shaughnessy Asset Management in Greenwich, Conn.

"Alan is a consummate professional," said O'Shaughnessy, who recently left Bear Stearns Asset Management. "He is extremely erudite. His connections within the industry are incredible. He has a lightning-quick mind."

Bernstein Research analyst Brad Hintz said he did not view Cayne's changing role as a radical strategic shift by the investment bank. Bear Stearns "is conservative and the company has largely stayed in its comfort zone. We expect that to continue," Hintz said.

Banking has not been a big part of Bear Stearns' business. The company has ranked No. 12 among top advisers of U.S. mergers for the past two years, according to research firm Dealogic. In 2007, it was adviser on 55 deals valued at $83.5 billion, Dealogic said.

The company's banking business has concentrated on a "narrowly defined group of industries and product lines. But this niche strategy is not winning," Hintz said. "Bear Stearns has lost market share in equity underwriting, investment grade debt, high yield and M&A advisory over the last decade."


Hedge funds or other private financial companies could consider acquiring Bear Stearns in the form of a reverse merger to gain a publicly traded asset, some analysts said.

Thomas Russo, a partner at Gardner Russo & Gardner, which manages more than $3 billion, said there has been "a lot of interest from the sovereign funds in this area."

A foreign bank or investor could want Bear Stearns in order to gain a U.S. presence, analysts said.

In October, Bear Stearns sold a 6 percent stake to China's government-controlled Citic Securities. Last year, British billionaire Joseph Lewis began accumulating Bear Stearns stock and amassed a roughly 9.6 percent stake by the end of 2007.

Some analysts doubt there would be a quick takeover of Bear Stearns since it is unclear if all problems from the subprime mortgage crisis have emerged.

Bear Stearns, a trader of mortgages and mortgage-related investments, took a $1.9 billion write-down in the quarter that ended Nov. 30, reflecting the reduced value of subprime mortgage-related securities.

"The firm needs to shrink rapidly and then rebuild on a more solid base. It will be a mammoth effort to fix the problems here but again, I believe that Mr. Schwartz can do this," Punk Ziegel's Bove said.

Shares of Bear Stearns were down $2.42, or 3.17 percent, to $73.83 in afternoon trading on the New York Stock Exchange.

(Additional reporting by Ed Leefeldt, Jonathan Stempel and Joseph A. Giannone in New York; Editing by Derek Caney, Phil Berlowitz, Toni Reinhold)

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