Investment Banks Not Officially Banks

Recently, the American Investment bank, Bear Stearns went kaput under the flailing US economy. It's another example of how a $20 billion company can become virtually worthless so fast. It's a sad scenario, really, as the investment bank had 14,000 employees; not a small amount by any standard.

So do you think that your money in the bank is safe now? Well, it will give you a piece of mind to know that investment banks like Bear Stearns are different from the regular banks where you have you savings accounts. Investment banks are not officially banks & are not officially monitored by the government.

You don't receive the $100,000 protection from the government at investment banks but you do at regular banks. Just to be on the safer side, you may want to limit placing a maximum of $100,000 at any regular bank because the government only protects your money on the amount per bank.

Let us see who lost big when the big Bear Stearns Investment bank folded recently. Mind you, the losses are all estimated no less than $20 million per big investor. Well, it's not the big losers that deserve the pity because surely they have plenty of money & a backup plan or else they would not be super rich in the first place. What should be an issue is how the previous 14,000 employees of Bear Stern are holding up. Perhaps you have watched the movie entitled Fun with Dick & Jane starring Jim Carrey where the CEO & etc still live a good life despite his billion dollar company folding while the former employees are stuck in a rut.

Let us take a look at the probable Jack McCallisters of the Bear Stearns incident who "lost" money:

• Alan Schwartz; Bear Stearns president and CEO, Estimated losses: $115.7 million

• James Barrow; Principal at Barrow Hanley Mewhinney & Strauss, Estimated losses: $991.7 million

• James "Jimmy" Cayne; Bear Stearns chairman of the board and former CEO, Estimated losses: $477.8 million

• Joseph Lewis; Tavistock Group founder, Estimated losses: $904.5 million

• Bruce Sherman; CEO of Private Capital Management, Estimated losses: $478.5 million

• Bill Miller; Legg Mason Capital chairman and CEO, Estimated losses: $198.6 million

• Carl Glickman; Bear Stearns director and president of the Glickman Organization, Estimated losses: $27.2 million

• Samuel Molinaro Jr.; Bear Stearns CFO and COO, Estimated losses: $20.6 million