NEW YORK Bear Stearns Cos BSC.N Chief
Executive Alan Schwartz on Wednesday dismissed recurring
speculation that the investment bank faces a cash crunch,
saying it has hefty cash reserves that have remained little
changed this year.
Schwartz, in a televised interview on CNBC, also said he is
comfortable with the range of analysts' earnings estimates for
the fiscal first quarter ended Feb. 29. Results for the quarter
are due next week.
"We don't see any pressure on our liquidity, let alone a
liquidity crisis," he said.
Bear finished fiscal 2007 with $17 billion of cash sitting
at the parent company level as a "liquidity cushion," he said.
"That cushion has been virtually unchanged. We have $17
billion or so excess cash on the balance sheet," he said.
Schwartz denied speculation that other brokers were turning
down Bear's credit on trades for fear of counter-party risk.
"There's been a lot of volatility in the market, a lot of
disruption. That's causing some administrative pressure,
getting trades settled. We're in constant dialogue with all the
major dealers, and I have not been made aware of anybody not
taking our credit," he said.
Bear's stock has plunged in recent weeks, and the cost of
insuring its debt against defaults has spiked, as mortgage and
credit markets continue a slump that began a year ago.
As one of the largest players in mortgage-backed bond
markets, investors have assumed Bear's exposure would lead to
"None of that speculation is true," Schwartz said. When
speculation starts in a market, one that has a lot of emotion
in it and people concerned with volatility, "they will sell
first and ask questions later," he said. "That creates its own
Schwartz said the first quarter was a "difficult" period,
but he said he was comfortable with analysts' earnings
Wall Street forecasts range from 46 cents to $2.34 per
share, according to Reuters Estimates. The average forecast is
$1.07 a share, down 72 percent from a year earlier.
Bear shares were up $1.95 to $64.92 in morning trade on the
New York Stock Exchange after rising as high as $67.82 earlier
in the session.
(Reporting by Joe Giannone; editing by John Wallace)