Spector Pays the Price (Literally)

Instant Karma Department:

When Bear Stearns issued $2.25 billion of five-year bonds on Monday, the day it said a third proprietary hedge fund was in trouble, it had to swallow an interest rate 245 basis points over Treasuries.

That's a premium of 120 basis points over typical single-A corporate bond yields.

On $2.25 billion of bonds, that adds another $27 million in interest payments per year, or an extra $135 million in total.

And that, weirdly enough, is more or less the same amount of money that Jimmy Cayne was planning to pay Warren Spector over that time -- before Spector took the fall for the bank's subprime-mortgage fiasco that is imperiling the hedge funds.

Felix Salmon's full Market Movers blog post on this subject can be found here.