Bear Stearns - a cry for help?

Financial stocks bounced back in the US on Thursday led by a 13% jump in shares of Bear Stearns (BSC) . OK what was the good news? Well there doesn't seem to be any although I did pick this up from marketwatch.com:

The company, which heralded the recent credit market crisis when two of its hedge funds ran into trouble, has been talking with potential investors, including Chinese banks about new funding, said Richard Bove, analyst at Punk Ziegel & Co.

The firm is talking about selling as much as a 20% stake in the company, Bove said. Also helping financials, a report by rating-agency Fitch said that U.S. brokerage firms are well funded and have sufficient capacity to absorb losses from marking their assets to market.

Now to me, the fact that Bear Stearns is running around asking the Chinese,which is more like begging since obviously noone in the US wants to lend them money , coupled with possibly looking to sell off a 20% stake in the company is rather alarming. Is that how bad things are?

Then there is the little matter of the huge contradiction in the last paragraph above. According to Fitch, the brokerage houses are well funded but at the same time Bear is out there trying to secure funding and flog off a 20% stake.

I guess I shouldn't be surprised the ratings agencies lost all credibility a good while ago. Whatever the case I don't think we've heard the last of the dramas unfolding at Bear.

As noted before October is going to be an interesting time for the brokerage houses when they report 3Q07 earnings and we can assess the first signs of financial damage from the fallout in credit markets.