The Rise and Fall of Bear Stearns by Alan C. Greenberg & Mark Singer

Author:Alan C. Greenberg & Mark Singer
Language: eng
Format: epub
Publisher: Simon & Schuster Paperbacks
Published: 2011-07-15T00:00:00+00:00

CHAPTER

9

THE DAY I STOPPED BEING CHAIRMAN of Bear Stearns Companies, Inc., I also stopped writing memos. I had done what I could to infuse particular habits of mind into our DNA. Now that Jimmy was the boss, I did not intend to cross certain lines. We employed 10,500 people. We operated thirty businesses, and I would never have pretended to be familiar with the ins and outs of most of them. My sense of my role as a member of the executive and risk committees remained the same; I said what I thought, as forcefully as necessary, and let the chips fall. Executive committee votes often weren’t unanimous and I wasn’t always in the majority, but our discussions were candid and to the point. On the risk committee, only two votes mattered—Warren Spector’s and my own—and the protocol was cut and dried; either we were too long or too short or just about right. My daily presence on the trading floor, I felt, made a statement that was neither blunt nor subtle: as long as I’m still working here, we’re not going to be doing dumb stuff. My phone still rang seventy or a hundred times a day.

For the next five or six years most things continued to get better. Between 2001 and 2006, our earnings per share almost quadrupled, net revenue increased by more than $4 billion, our book value reached $86 per share, and our stock price reflected that. A major proportion of our profits now came from the fixed-income division—trading gains on corporate and municipal bonds, commissions, appreciation in the value of our own portfolio, and fees generated by newly developed products, especially derivatives. All of this fell within Warren’s purview, as did Bear Stearns Asset Management, which operated a diverse selection of hedge funds that catered to high-net-worth individuals. As time went by, Warren also began to assume oversight of equity trading, which historically had been my turf. That incursion began when, without consulting me, he raised position limits on some of our arbitrage trading. I didn’t appreciate the way he went about it but, as in my dealings with Jimmy, I didn’t pick a fight. The fact was that I had a lot of respect for Warren’s abilities and there was no point in rocking a ship that was sailing as smoothly as ours.

I had a similar high regard for Warren’s co-president, Alan Schwartz. In discussions with my wife, when I referred to the firm’s ruling triumvirate I had a nickname for each: Ego, Smarts, and Smoothie.

Ego obviously was Jimmy, a self-important tough talker whose listening skills diminished in inverse proportion to our stock price and the number of shares he owned. Basically, from the moment Jimmy became chairman, he made no pretense of concealing his disdain for my ideas or opinions. Several months after the transition, I read about Sherron Watkins, the Enron vice president who first blew the whistle on that colossal fraud by informing Kenneth Lay, the CEO, of misstatements in financial reports.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.