Save one bond desk at Bear Stearns, the muni desk

Let’s face it. JP Morgan doesn’t need most of the personnel from Bear Stearns. They have a bond department, clearing, trading and sales. There is one area of Bear Stearns that is very profitable and a perfect fit for another firm.

Deutsche Bank is an excellent firm for equities and bonds, but has no municipal bond investment banking or sales. Municipal bonds will be one of the largest growth areas of fixed income in upcoming years due to:

1- Aging Baby boomers

2- City and state shortage of cash revenue due to falling real estate values and foreclosures

3-  Badly needed infrastructure replacement (bridges, roads, schools etc)

Bear Sterns has the bankers and sales team to put Deutsche Bank into the game on day one. It will also help market liquidity if another municipal market maker is not lost.

I have nothing against JP Morgan. They are an excellent firm with talented people. However, looking back over past firm closures and mergers (Drexel, EF Hutton, Thompson and many regional firms) most people ended up losing their retirement and their Wall Street jobs forever.

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