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Lecture 121:17Bear Stearns Acquisition by JP Morgan:Jamie Dimon (JP Morgan) agreed to acquire Bear Stearns under the condition that the US government would reimburse JP Morgan for toxic assets from Bear Stearns.Lehman Brothers:US Government unable to convince someone to acquire Lehman. Merrill Lunch:On slippery slope, sold to BOA. Just days ago, $2.4B lawsuit against BOA due to the acquisition. Golman Sachs:No longer pure-play, converted to bank holding company, meaning more regulated to calm down the market. Same with Morgan Stanley. They now have a small percentage of deposit and lending business, and thus more diversified. Hopefully, deposit gives more stability to liability side of balance sheet. In conclusion: NO MORE PURE-PLAY INVESTMENT BANKS ANYMORE.Problems with Pure-Play banks in 2008:Credit spread, difference between borrowing costs and your investment return. If short-term financing dries up, need to look to long-term financing, but long-term investors aren’t willing to lend because of risk.
Goldman Sachs:Institutional Client Services + Investing & Lending = the trading business.JP Morgan:Investment Banking division constitutes investment bank + asset management. Investment Banking Division:Coverage Group (Relationship Management): customer or client in healthcare in Chicago, there will be a geographic coverage person, and a industry coverage person. Product Groups: Capital Markets Group (Product Group):Made up of Investment Banking Division & Trading Division. Control of a company is important and may lead to purchase above stock price (control premium).CASE AStory of Bear Sterns. Different to other pure-play investment banks, because they only hired people with PSD degrees: Poor, Smart and Desire to be rich. BS was mostly a trading house. Long Term Capital Markets, run by John Merriweather, were huge as a hedge fund. All
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investment banks, investment bank, investment banking division