A Eulogy for Bear Stearns

Every crisis has it's unsung heroes. When the history books are written on The Great 2008 Credit Crunch, Bear Stearns shareholders - who today handed over their shares to JP Morgan for an Alexander Hamilton - will almost certainly have fulfilled that role. Investors everywhere owe them their gratitude.

The superheroes of the credit collapse have already been well eulogized. There's JP Morgan boss Jamie Dimon in his pin-striped cape swooping in to buy Bear and save the markets from mayhem, alongside Wonder Twins - New York Federal Reserve Bank chief Timothy Geithner and Treasury secretary Hank Paulson.

But the deal these Wall Street Super Friends structured to avoid Bear's spider web of counter-party relationships collapsing the global financial system would not have been possible without the sacrifice of the firm's equity holders, a third of whom included the company's own employees.

Their sacrifice served two purposes. By allowing JP Morgan to assume the 85-year-old firm - the alternative to a rushed bankruptcy and the liquidation of hundreds of billions of dollars of trades - financial Armageddon was arguably averted. Second, by getting no more than a tenner for a stock not long ago worth $170, Bear shareholders became sacrificial lambs for regulators intent on avoiding the nurturance of moral hazard.

So in addition to their $10, should we award Bear shareholders a Lucite plaque for their saviour status? The answer is no. Though they may deserve our thanks, they would have done a greater good by forcing Bear's hapless board, led by absentee chairman Jimmy Cayne, to better fulfil it's fiduciary obligations. Had they done so, the crisis - and the evaporation of Bear Stearns - might have been averted.