Does Bear Stearns own 383 Madison Avenue, the Manhattan building from which it operates? This question is, as John Carney and Choire Sicha point out, oddly difficult to answer.
But the answer determines whether Bear was sold for a song or actually paid JP Morgan Chase to take it over.
Bear’s building is worth at least $1.2bn and probably quite a bit more. So, if Bear owns it, then the bank it effect gave JP Morgan a net $1bn to take on its balance sheet (or some of it, since the Federal Reserve lent a helping hand).
On the other hand, if Bear does not own it, then it received $230m, valuing itself at a princely 2.5 per cent of book value. That is not a lot, but it is at least something.
JP Morgan insisted during its Sunday night conference call that Bear owns the building, but there is some confusing talk about a synthetic lease and the building being an off balance sheet asset. Still, the consensus seems to be that, if anyone owns 383 Madison, Bear does.
So what looks like a derisory price for Bear’s business is actually a negative one.
Update: Justin Fox concludes from this that the Fed handed Bear to JP Morgan on a plate.
