Cayne Mutiny at Bear Stearns Too Little, Too Late

With the final week of Bear Stearns' (BSC-NYSE) glorious history about to be booked, the post-mortems are sure to roll in fast and furious. Kate Kelly of the Wall Street Journal is taking her shot in a 3-part series running this week, although Part One breaks little new ground, outside of a few anecdotal stories:

Twelve hours after agreeing to sell Bear Stearns Cos. for $2 a share, Alan Schwartz wearily made his way to the company gym for a much-needed workout.

It was 6:45 a.m., March 17, and Bear Stearns's chief executive had slept little since hammering out the ugly details of his fire-sale deal with J.P. Morgan Chase & Co.

When Mr. Schwartz, already dressed in his business suit, trudged into the locker room, Alan Mintz, still in his sweaty gym clothes, made a beeline for the boss.

"How could this happen to 14,000 employees?" demanded the 46-year-old senior trader, thrusting his face uncomfortably close to Mr. Schwartz's. "Look in my eyes, and tell me how this happened!" WSJ

We are fast approaching the one year anniversary of Bids Wanted, which lead me to compare Bear to First Jersey Securities. Of course, First Jersey was probably never levered 15:1 similar to Cioffi's fixed income hedge funds.

Rich Marin’s famous blog was first mentioned here, a fact overlooked by bloggers and journalist’s who ran with the ball with nary a shout out. My fateful job interview with Rich, before his High-Yield diet took its toll, led to some insight that bloggers could not bring to the table.

Cayne’s move to pin the blame of Warren Spector was predictable, although I thought Warren would put up a better fight.

Of course, the board was stacked with Cayne loyalists, and they certainly were not surfing the net trying to see what type of opinion was blowing in the wind.

Perhaps they should have; but waiting until January 2008 to show Jimmy the door, and then blaming Alan Schwartz, strikes me as a bit unfair.

Corporate governance was never Bear’s strong suit; Alan Mintz might want to look in the mirror if he is looking for scapegoats. There is plenty of blame to go around.

But some people, namely short sellers, saw through the spin:

“Don’t be distracted by the noise. I am certainly not.” -Jimmy Cayne, November 2007

Next up from the Journal, Part Two and Three:

Part Two: Run on the Bank. Executives believed they were about to turn a corner, but rumors and fear sent clients, trading partners and lenders fleeing.

Part Three: Deal or No Deal? The Fed pressured Bear Stearns to sell itself, but a misstep in the hastily drawn agreement nearly scuttled the deal.

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Great article or not? Naked Capitalism begs to differ.....Weird Wall Street Journal Story on Bear’s Demise
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Lost Opportunities Haunt Final Days of Bear Stearns
WSJ
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The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Position

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