In spite of it all, the "it" being the stunning speed with which Bear Stearns hit rock bottom last month and the midnight ride rescue of the investment bank by J.P. Morgan Chase, Bear Stearns is still reporting a profitable first quarter.

The bank, reported a profit of $.86 per share on revenues of $3.4 billion. During the first quarter of 2007 revenue was $4.8 billion; net income was down 79% to $115 million from $554 million of $3.82 a share. As an indication of just how swiftly things went bad at Bear Stearns, the first quarter ended February 29 and over the weekend of March 15 the Bush Administration strong armed an acquisition of Bear Stearns by J.P. Morgan at a fire sale price of $2 per share ' subsequently renegotiated to $10.



But even with the welcoming arms of J.P. Morgan about to embrace it, Bear Stearns has substantial legal problems looming. The company announced on Monday that it had received a "Wells Notice" from the Securities and Exchange Commission back in February indicated that the company may face civil charges growing out of the bidding process for municipal derivatives that are sold to states, municipalities, and other issuers of tax-exempt bonds. Earlier actions dating back to municipal market transactions back in the early 1990s are being investigated by the Justice Department.

There is also a civil investigation by the Federal Trade Commission of Bear Stearns' subsidiary EMC Mortgage Corporation seeking information on whether EMC and Bear violated (unspecified) consumer protection laws in carrying out its servicing activities.