Boo-hoo, Bear

This is the kind of thing I'm talking about when I say that failure should hurt:

Just over a week ago, a complacent Bear Stearns went to the feds cap in hand, saying it would be gone by last Monday if help wasn't forthcoming. Wall Street was on edge, and a Bear failure might have led to subsequent collapses. JPMorgan had to be compensated for the toxicity of Bear's books, and shareholders and bondholders were deemed damn lucky to be receiving anything at all.

Now, with the financial system rejuvenated in the wake of the Bear deal, with interest rate spreads falling and inflection point calls growing more common, Bear sees an opportunity to rewrite history and secure a bit more for itself. This is a stunning turn of events. Having nearly destroyed its shareholders and the financial system, Bear is responding to positivity caused by the negation of the threat Bear posed with allegations that it was unjustly treated.

Yes, the Fed leaned on Bear to take a bad deal. But that's because Bear needed the Fed, i.e. the taxpayers, to bail it out. Renegotiating the deal makes things worse by making failure marginally more attractive, and also, by signalling to anyone else who needs funds that they should hold out for a better deal. The reason these things work, if they work at all, is that the windup is swift and orderly.