Another flawed Bear Stearns autopsy
Bryan Burrough, author of ‘Barbarians at the Gate: The Fall of RJR Nabisco,’ tosses his 10,000 words into the Bear Stearns meltdown pot in Vanity Fair this month, featuring a quote from an unnamed vice-chairman of an unnamed investment bank.
“If I had to pick the biggest financial crime ever perpetuated,” he concludes, “I would say, ‘Bear Stearns.”’
Well, that understandably anonymous individual definitely needs to get out more.
The story adds some new names to the unindicted co-conspirators file, naming Stevie Cohen’s SAC Capital, which “vehemently” denied the allegations, and “Jeff Dorman, who briefly served as global co-head of Bear’s prime brokerage business until resigning to take a similar position at Deutsche Bank last summer.”
“We heard Dorman was saying things last summer,” says a Bear executive. “At the time we reached out to Deutsche Bank and told them he better stop it.” (Asked about the allegation, a Deutsche Bank spokeswoman acknowledged that Bear had sent its executives a letter last August asking Dorman not to solicit its clients, as he had agreed upon leaving Bear. Deutsche Bank replied that he wasn’t. The exchange didn’t explicitly address what Dorman might have been saying about the firm, nor would the spokeswoman.)
Hmmm. But the distinguishing feature of this contribution to the pathologist’s file is its fisking of the contribution of “trigger-happy [CNBC] reporters” during the week of Mar. 10, when fleeing customers pushed Bear into the abyss. That section includes at least a dozen mentions of the word ‘rumor,’ but omits to mention that virtually all of the so-called rumors—most specifically of clients pulling assets, and counterparties refusing to deal with Bear— were, in fact, true.
“Everyone on Wall Street knows the joke,” says another Bear executive involved in the discussions. “At CNBC, there is simply no adult supervision.”
Nobody could contest that analysis but, amidst the frenzied finger-pointing, is plenty of evidence that adult supervision was at least as conspicuously lacking at Bear Stearns.
Bringing Down Bear Stearns
by Bryan Burrough
Vanity Fair Aug. 2008
(Forelock tugs to Felix Salmon and Dealbook.)
Earlier on NakedShorts
Great moments in death throes
May 29 2008
The last days of Bear
Apr. 1 2008
Isn't it pretty likely that this run against Bear Stearns, like the earlier piling on LTCM, was reasonably thought out by some of its competitors?
The irony is that the sole holdout to the LTCM bailout gets broken in the same manner, almost a decade later.
Posted by: Michael Webster | July 01, 2008 at 11:38