Grassley Seeks Probe of Lax Bear Stearns Oversight
Grassley wants information on “the nature, extent and propriety” of the discussions between Bear executives and SEC officials surrounding the case. Come to think of it, it hasn’t been such a great month for the SEC either.
It’s been a roller coaster few weeks for the enormous investment house, Bear Stearns.
First, there was the bad news of its financial collapse, followed by the good news that the Federal Reserve was providing $30 billion in taxpayer funds to bail it out. Then there was the bad news that JP Morgan Chase (which bought out the Bear) was offering only $2 per share to Bear stockholders, followed by the good news that JP was hiking that figure to $10.
But now comes news that Iowa Sen. Charles Grassley, the ranking Republican on the Finance Committee, wants an investigation into why the Securities and Exchange Commission’s enforcement division dropped an investigation into some of the Bear’s more dubious investment strategies last year.
In an April 2 letter to the SEC’s inspector general, Grassley writes:
According to regulatory filings and a December 2007 Wall Street Journal article, the SEC Enforcement Division declined to bring a case against Bear Stearns for improperly valuing mortgage-related investments. Given the later collapse and federally backed bail-out of Bear Stearns, Congress needs to understand more about this case and why the SEC ultimately sought no enforcement action.