Larry Elliott, Dan Atkinson The Gods that Failed; How Blind Faith in Markets Has Cost Us Our Future (2009)

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.Cayne and Schwartz ignored the constant backgroundnoise on Wall Street that Bear was ailing, but the New York rumormill had plenty to feed on.In November, the bank said it was cuttingits workforce by 4 percent of the worldwide total, and in Decemberannounced that it had lost $854 million in the fourth quarter and hadbeen forced to write down $1.9 billion as a result of the continuingproblems in the mortgage market.Far from rebounding, Bear hadposted the first quarterly loss in its eighty-five-year history; to makematters worse, it was sued by Barclays for misleading the British bankabout the performance of Cioffi s two collapsed hedge funds.Cayne,who had been attacked in the financial press for his laid-back (somemight say virtually horizontal) management style, appeared to recog-nize the writing on the wall for him personally: he cashed in $15.4million of Bear Stearns stock in the quiet trading days betweenChristmas and New Year.In the light of what was to happen to sharesin Bear Stearns less than three months later, it was one of Cayne s bet-ter decisions.It was certainly one of his last as CEO; he resigned onJanuary 8, 2008, but maintained the role of chairman.It was the curse of Bear Stearns that its CEO always seemed to bea long way from the front when the shooting started.The only thingCayne had been shooting in the summer of 2007 was pars and birdiesat the country club.In March 2008, when the bank s New York head-quarters was turned into a bunker, Cayne s successor, Alan Schwartz,was hosting the Bear Stearns media conference at the Breakers hotelin Palm Beach, Florida.Schwartz left New York on Thursday, March6, with a degree of concern about the Bear s exposure to three hedgefunds Thornburg Mortgage, Carlyle Capital, and Peloton Part-ners all of which had been reported the previous day to be about tobuckle under their losses from the financial crisis.Bear Stearns hadlent to all three hedge funds and there was talk (as there had been al-most every day since August) that all was not well at the bank.Schwartz was right to be worried because his bank was about tobe hit by the sort of irresistible pressure that had toppled NorthernRock the previous September.There was a difference, however.Thethe rock and the bear 35wounds at the Rock were highly visible; anybody with access to a TVcould see the customers patiently waiting to withdraw their savings.Bear Stearns died of internal bleeding, a massive hemorrhage thatwiped out $18 billion of capital in a week s trading and left the com-pany facing the choice of bankruptcy or an ignominious takeover.The bank s decision to accept the $2 a share bid (later raised to$10) inevitably prompted speculation as to who killed Bear Stearns.In truth, there were as many potential murderers as in an AgathaChristie detective story.Was it the ruthless hedge fund dealer sensingeasy pickings? Was it one of the rival banks Goldman Sachs orCredit Suisse that turned off the financial life-support machinewhen they realized the Bear was losing strength fast? Was it CNBC,the TV channel chirping away in every Wall Street dealing room,with its decision to run stories about the Bear s ill health on littlemore than market tittle tattle? Or was it the lawman Henry Paulsonof the U.S.Treasury who struck the fatal blow by insisting that aline of credit negotiated by Bear Stearns for twenty-eight days would,in fact, be good for only forty-eight hours.This whodunit has a messy, unsatisfactory outcome.Nobody willever know for sure who killed Bear Stearns.The events of the weekstarting on Monday, March 10, 2008, suggest that many of the sus-pects perhaps all of them fired the gun.A rumor on the previousFriday turned into a sharp sell-off in the Bear Stearns share price onthe following Monday, which was then picked up by CNBC.The re-port led to a further frenzy of selling, with seven times more BearStearns shares than normal changing hands on that day.On Tuesday, the Federal Reserve unveiled a new lending schemedesigned to make it easier for Wall Street firms to tackle the creditcrunch.The move did not help, since in the highly charged atmos-phere of that week it was assumed that the move was designed to helpa specific bank with a cash flow problem Bear Stearns [ Pobierz całość w formacie PDF ]

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