The Rise and Fall of Bear Stearns

by Alan C. Greenberg, Mark Singer

On March 16, 2008, Alan Greenberg, former CEO and current chairman of the executive committee of Bear Stearns, found himself in the company’s offices on a Sunday. More remarkable by far than the fact that he was in the office on a Sunday is what he was participating in a meeting of the board of directors to discuss selling the company he had worked decades to build for a fraction of what it had been worth as little as ten days earlier. In less than a week the value of Bear Stearns had diminished by tens of billions of dollars. As Greenberg recalls, "our most unassailable assumption—that Bear Stearns, an independent investment firm with a proud eighty-five-year history, would be in business tomorrow—had been extinguished. . . . What was it, exactly, that had happened, and how, and why?" This book provides answers to those questions from one of Wall Street’s most respected figures, the man most closely identified with Bear Stearns’ decades of success.


The Rise and Fall of Bear Stearns is Alan Greenberg’s remarkable story of ascending to the top of one of Wall Street’s venerable powerhouse financial institutions. After joining Bear Stearns in 1949, Greenberg rose to become formally head of the firm in 1978. No one knows the history of Bear Stearns as he does; no one participated in more key decisions, right into the company’s final days. Greenberg offers an honest, clear-eyed assessment of how the collapse of the company surprised him and other top executives, and he explains who he thinks was responsible. This is a candid, fascinating account of a storied career and its stunning conclusion.

"Whoever coined the adage about hindsight being twenty-twenty didn’t make any allowance for astigmatism or myopia. Whose hindsight? And from what distance? A picture clarifies or blurs with the passage of time, and whatever image emanates at a given instant is colored by the biases of the observer. Knowing that my perceptions of the fall of Bear Stearns are inevitably somewhat subjective, I’ve tried to make sense of exactly what happened when and how this or that development along the way contributed to the ultimate outcome. I’ve wanted to get a fix on the moment when we ceased controlling our own destiny—not out of intramural curiosity but because that loss of control resonated and replicated globally. For those of us who across decades gave so much of ourselves to Bear Stearns, what took place during a single week in March 2008 was a watershed in our lives. With sufficient time and distance, as the context expanded, we could recognize it as the signal event of an enormous disruption that the world will be struggling to recover from for years to come."

—from THE RISE AND FALL OF BEAR STEARNS

Genres: Business, Finance, Biography, Nonfiction

224 pages, Hardcover

First published May 11, 2010

Reviews

[m · Rating 2 out of 5]

This book is so short & superficial that one can read it entirely without leaving the bookstore.

The topic is fascinating. Mr. Greenberg was Bear's former CEO & chairman, so he was well placed to narrate an account substantiating his book's title. Unfortunately, his recollections & musings add little or nothing substantive to William Cohan's published account, so much of the specific decisions & events immediately leading up to Bear's collapse remain shrouded in secrecy.

This book suggests that Mr. Greenberg did not comprehend the myriad risks that his firm undertook, even though he paid himself more than $20 million annually for more than a decade in return for managing said risks.

Bear Stearns alums like myself must await the narratives of more knowledgable persons — Warren Spector, Tom Marano, Ralph Cioffi ? — in order to learn what precipitated "the fall of Bear Stearns."

[Viktor Nilsson · Rating 2 out of 5]

The beginning is interesting, talking about his early years in the firm, his career and some of the deals he conjured. However, a lot of detail is left out which in some cases makes it all but impossible to follow, at least when talking about deals. Instead, it all becomes a matter of discussing personal relationships.

I was severely disappointed at his coverage of the firm's downturn. At one point he tells the story of how he explained to Jimmy, the infuriated CEO, that the board doesn't have any room to negotiate the price at which the firm will be sold, because he said that anything was better than 0, which is what shareholders would get in a bankruptcy. So basically he's saying that the firm is insolvent - that the assets are to poor to cover the liabilities. He then spends several chapters lamenting that if only depositors would have maintained their confidence and not withdrawn their cash, the firm would have survived. Thus, he is making the case that the firm was not insolvent but rather just out of liquidity (not enough cash to settle short-term debts). In some way a lot of what he is saying doesn't make sense, he seems to contradict himself.

The book talks at length about how this guy Jimmy, who Greenberg portrays as an ignorant a-hole from day one, rose to prominence within the firm, eventually ending up as CEO, succeeding Greenberg himself. Every misfortune happening to the firm is blamed on Jimmy. This might well be true, what do I know. But Greenberg still seems to have no regrets in having appointed Jimmy as his successor. That doesn't add up either.

The book mentions about how other investment banks went astray when they loaded up on mortgage-based junk, but fails to mention when this activity started ballooning within Bear itself. Greenberg briefly mentions how the firm's leverage reached giddy heights, without even explaining how this came about. And of course, none of this was Greenberg's own fault - it was due to the decentralized organization and thus nothing that was within his own reach. I always thought that leveraging and risk management is one of the most centralized and strict issues within any bank? In fact, he explains that he himself had a "reputation as a highly adept risk manager" (p. 157) on several occasions.

It all just adds up to it-was-not-my-fault and it-was-that-guy's-fault-even-though-I-appointed-him-myself-and-knew-about-his-flaws. He even blames Jimmy for never having sold any of his own shares in the firm, which seems like really odd criticism. In the end, I do give it an extra star, because the story of Bear's rise is quite interesting. The story of the fall is not.

[Sara · Rating 4 out of 5]

I didn't know what to expect. I had never read a "Banker's" memoir before and went in thinking he was a greedy SOB who excused their mistakes during the 2007 Fin Crisis. But I was wrong and got pulled into his story and life. I liked the fact that he grew up in Missouri/Kansas and didn't have a degree from Harvard. This story was a journey. You didn't have to think much but learn about someone's character.

[Steven H · Rating 3 out of 5]

THE FORMER CHAIRMAN OF BEAR STEARNS DETAILS ITS HISTORY

Alan C. Greenberg is the former Chairman of the Board of the Bear Stearns investment bank [whose 2008 collapse and sale to JPMorgan Chase was a key event in the financial crisis of 2008], and is vice chairman emeritus of JPMorgan Chase. He is also the author of Memos from the Chairman.

He wrote in the first chapter of this 2010 book, "By Thursday enough lenders had cut off our access to overnight credit that we confronted an excruciating choice---either a shotgun marriage with another firm... or a bankruptcy filing... we knew that come Monday we would have been bought or we would be no more. Without a doubt, we would never again control our own destiny." (Pg. 4)

He is highly critical of James E. "Jimmy" Cayne (former CEO of Bear Stearns): "I suppose because Jimmy's capacity for self-aggrandizement was still largely under wraps, what I failed to recognize at the time---I plead guilty to being slow on the uptake---were the lengths he would go to rewrite history, to spin a mythology that exaggerated his own accomplishments while diminishing the contributions of others" (pg. 86); "Over the years, when various partners confided to me that Jimmy was egotistical and devious, I had little patience for anyone's complaints... I had no way of foreseeing that Jimmy's foibles would lead us to our ultimate destination" (pg. 104); "I have to marvel at Jimmy's chutzpah. Or should I say his delusional ravings?" (pg. 107); "this particular example of Jimmy's egotism, tone deafness, and clueless contempt for the rest of us still provokes my outrage: for a $10.7 billion dollar deal, he wouldn't even rearrange his tee-off time." (Pg. 153)

He offers comments such as this: "My own succinct history of Long-Term Capital Management goes like this: It was a spectacularly successful money machine. Until it wasn't." (Pg. 123) Commenting on the refusal of Bear Stearns to help other banks bail out LTCM in 1998, he observes, "I reject the conspiratorial view that we were singled out for retribution because of our stance during the Long-Term Capital Management crisis. Still, I'm aware that many of our aggrieved employees felt differently and were outraged by the thought of such vindictiveness." (Pg. 192)

Not the most "objective" analysis of Bear Stearns' collapse, this is still a highly interesting account for anyone interested in knowing more of the "background" to the economic collapse of 2008

[Joshua Taylor · Rating 3 out of 5]

This book is a firsthand look at the career of Alan Greenberg, long-time CEO of Bear Stearns who was still associated with the firm in an emeritus role during the fateful economic collapse in 2008 that killed it. The book is written conversationally and provides interesting insights, but I didn't find it especially riveting and it got a bit bogged down in presenting Greenberg's side of a tit-for-tat with Jimmy Cayne, one of his successors. I have no idea which of the two has the more truthful telling of events, but I do know that regardless the parts of the narrative I found least compelling were those where Greenberg's defense of himself from Cayne's accusations came to the fore. Despite this, the book was easy to read and informative - something the somewhat arcane and obscure world of investment banking and high finance isn't always. If you want some background on this historic event, it's probably worth a read.

[Grommit · Rating 3 out of 5]

This is the story of Alan Greenberg, who rose through the ranks to run Bear Stearns.
A relatively quick read (200 pages) especially if you have a handle on the finance terms.
Bear was a success story, continuously expanding their services and growing their business, until they got strangled in the MBS fiascos. Greenberg was part of most of this growth, although he takes pains to point out the skills and ideas others brought to the firm.
Interesting tidbits on how Mr. Greenberg did the little extras to get ahead.
You really need to have your corporate finance dictionary handy to follow some of the stories.
Lots of time focused on Jimmy Cayne, his ego, questionable behavior, etc. But I suppose this is to be expected in the land of the uber-driven.

[Neil Johnson · Rating 2 out of 5]

Should have been titled:
"The Extraordinary and Amazing Life of Me, Alan C. Greenberg, an Extraordinary and Amazing Person"

Alan C. Greenberg (and his co-author) is a good writer who tells a good story. You can tell how much he loves the subject, Alan C. Greenberg.

There are better books about the financial crisis of 2008 that are not direct attacks at former colleagues and co-workers to make sure the author receives all of the credit for any good that happened in his life and none of the blame for the catastrophic loss and pain he helped cause hundreds of millions of people.

The hubris is fascinating, depressing, and all too expected from his ilk.

[Hugh Heinsohn · Rating 4 out of 5]

A good, brief book laying out how Bear Stearns came to be one of the largest investment banks in the world and how it came to be dissolved in the 2008 financial crisis. Some score settling, most notably with Jimmy Cayne, but overall well told by a real insider - Ace Greenberg, who started as a clerk in 1949 and eventually became the CEO and Chairman. He was mostly retired by the time of the crisis, but was still the Chairman of the Executive Committee when the collapse happened.

[Tammi · Rating 4 out of 5]

We know the story but we do not necessarily know all the players/details as described by Ace Greenberg. Quick read

[Beale Stainton · Rating 4 out of 5]

This was a book that got me from the get go and without knowing who Alan Greenberg was prior to picking it up I liked the way it started. There is that air of confidence about the young man, austere and ambitious working on Wall Street. There is a toughness about him and a strong individualism. I personally admire this in people.

However I found the story did start to drain the further up the Bear Stearns ladder he went. He becomes more of a selfish, arrogant prick, but I guess along with the qualities I previously mentioned these are traits which come with the territory more often than not, especially in the high finance world of Wall Street banks. It almost seems like he spends half the book discrediting the abilities of his predecessor Cy Lewis as someone who didn't know how to tell the difference between a losing share and a winning one (maybe he actually didn't, but that's a tough sell of a theory) and then he spends what seems like an eternity bitching about his successor Jimmy Cayne. Sure this doesn't deserve a review of four stars, but at the same time Greenberg did put some things in perspective for me i.e. the happiness factor of a life like his. This represents, in part, the value of a book for me, being what you take from it, no matter how tough the read at times.

Outside the personal stuff I guess the rest is history. What happened in the industry and on the markets, that's all self-explanatory and as always the product of gross speculation. Greenberg seems to deny his responsibility in the speculative pursuits Bear Stearns pursued and seems to dump all the responsibility off onto Jimmy Cayne's shoulders. However you've got to think that with all the power and influence Greenberg had in the firm he could have been a little more proactive in managing the risk of the company's assets.

By the sounds of it the demise of Bear Stearns began with the formation of the two hedge funds which specialized in the riskiest of mortgage backed securities. The default of these securities led to the $867 million quarterly loss, which led to everything else. In the view of Greenberg this seems to be entirely Jimmy's fault, but I'm not too sure of that.

[Tim · Rating 3 out of 5]

For another angle on the U.S. financial meltdown we look to Alan ‘Ace’ Greenberg’s latest book (his second) “The Rise and Fall of Bear Stearns.” Ace’s book is more of a memoir than a chronicle of the latest round of financial regress on the Street. The legendary Wall Street personality regales the reader with stories of his Oklahoma upbringings, his early days at Bear Stearns (where he served out his half-century career) all the way up to the days of running the company, avoiding the dot-com bust but landing head-first in the quicksand that became the mortgage backed securities, sub-prime meltdown.

Sitting and watching Bear’s stock price plummet from the high hundreds to an eventual $2 a share offer from JP Morgan Chase was both a sobering and melancholy finale for the well-respected veteran Greenberg. Though rather than crying sour grapes over this terminal ending, Greenberg saves most of his vitriol for his CEO replacement, Jimmy Cayne, who Greenberg views with unconstrained disgust as he (Cayne) appears to disregard the well-being of the company in its darkest moments, preferring to play golf or compete in bridge tournaments where he was a renowned championship player; a proverbial Nero as CEO.

The shame of the book is two-fold. One, is that Greenberg, a legend on Wall Street, shares very little of what made him the expert arbitrager of financial markets in the 70’s, 80’s and 90’s, and more importantly, that the book, only 197 pages in length, seems more designed to settle the score of his late period conflicts with those who took his position(s). If his purpose, as it appears, was to create what one writer described as a ‘memoir as revenge,” Greenberg has succeeded. If that is your view of success.

[Blog on Books · Rating 1 out of 5]

For another angle on the U.S. financial meltdown we look to Alan ‘Ace’ Greenberg’s latest book (his second) “The Rise and Fall of Bear Stearns.” Ace’s book is more of a memoir than a chronicle of the latest round of financial regress on the Street. The legendary Wall Street personality regales the reader with stories of his Oklahoma upbringings, his early days at Bear Stearns (where he served out his half-century career) all the way up to the days of running the company, avoiding the dot-com bust but landing head-first in the quicksand that became the mortgage backed securities, sub-prime meltdown.

Sitting and watching Bear’s stock price plummet from the high hundreds to an eventual $2 a share offer from JP Morgan Chase was both a sobering and melancholy finale for the well-respected veteran Greenberg. Though rather than crying sour grapes over this terminal ending, Greenberg saves most of his vitriol for his CEO replacement, Jimmy Cayne, who Greenberg views with unconstrained disgust as he (Cayne) appears to disregard the well-being of the company in its darkest moments, preferring to play golf or compete in bridge tournaments where he was a renowned championship player; a proverbial Nero as CEO.

The shame of the book is two-fold. One, is that Greenberg, a legend on Wall Street, shares very little of what made him the expert arbitrager of financial markets in the 70’s, 80’s and 90’s, and more importantly, that the book, only 197 pages in length, seems more designed to settle the score of his late period conflicts with those who took his position(s). If his purpose, as it appears, was to create what one writer described as a ‘memoir as revenge,” Greenberg has succeeded. If that is your view of success.

[Mamta · Rating 2 out of 5]

As a former employee of Bear Stearns, its quite appalling that such men with such big egos ran a great institution with a great culture to the ground. This book is a self-aggrandizing piece on Ace Greenberg. I loved his book "Memos from the Chairman," but this just seems to completely crumble his reputation as a very knowledgeable and humble man that ran Bear Stearns and made it into the amazing institution it once was. He takes many jabs at Jimmy Cayne and much of the book is spent refuting what William Cohen wrote in "House of Cards" (which itself is a partial view on the situation as well). Even though you get his point of view, it by no means is an impartial view of the circumstances that surrounded Bear Stearns from its rise and fall.

It was a great institution (I sure as hell loved working there) and it's quite disheartening that this book portrays the leaders constantly squabbling like children. I do, however, believe that he accurately described Alan Schwartz as a calm and collected human being that had many attributes to admire and underwent significant amounts of turmoil in his short stint as CEO of Bear Stearns.

[Steve · Rating 2 out of 5]

It was interesting to get a "behind the scenes" look at Bear Stearns, but I don't feel like I really understand what happened to make it implode the way it did any better now than I did before I read the book. It was genuinely interesting to hear how Greenberg built his career and helped build Bear Stearns, but what I really wanted to learn about was the "fall" part of "the rise and fall", and I feel like he kind of glossed over that part. I mean, yes, he discussed the technical details of what went wrong, and he assigns blame to the people that he feels were most responsible for causing the problems, but what I really wanted was some discussion about why the "bad guys" made the decisions they did and why nobody stopped them, and I feel like a lot of that was missing. I suppose that in some way's it's only natural considering that Greenberg is not a mind reader, nor was he involved in every decision that lead to his firm's eventual downfall. But I would have like to get a little bit more of a "post mortem" to explain exactly what happened and how others can avoid the same fate. Instead, all I really walked away with from this book was, "Don't hire Jimmy Cayne".

[MikeFromQueens · Rating 4 out of 5]

The early days and up until LTCM was interesting to delve into and pick up some nuggets of wisdom from this other oracle of Wall Street, though less well known than the other Great Plains oracle. Ace was a little less than informative about the final years of the company claiming his forte was Equities, though I can believe that the down-side risk was unknown - Warren Spector didn't know what he didn't know and probably did represent that the firm was covered, until it was actually called to task. As shame, really, that the chutzpa of the final emperors of the empire was not backed up by the same care and attention to the risks that Ace Greenberg lived by.

[David · Rating 2 out of 5]

Ace Greenberg is a legend on Wall Street. His writing is humerous, and the I learned some of his wisdom and the way he carried the firm is very interesting.

The second half of the book seems to place all the blame on Jimmy Cayne(the CEO) with the distruction of the firm. Yet Greenburg says in the beginning he was responsible for the riskiness of the firm's investments. It seems like the purpose of the second half of the book's was to attack Jimmy Cayne, while Ace didn't seem to take any responsibility.

[Jamie · Rating 1 out of 5]

Couldn't finish it. This is one "proud" man. I was so put off by the first few chapters. My fave line? I was a difficult child. As can be expected when the 4 year old is smarter than the parents. Or something to that effect.

[Michael · Rating 2 out of 5]

Self aggrandizing tale of the excesses of Wall Street

[Michael · Rating 4 out of 5]

Very well written book about Bear Stearns. It was written with candor and it appears honesty.

[Larry]

I registered a book at BookCrossing.com!
http://www.BookCrossing.com/journal/12754313

[Rosemary A. · Rating 4 out of 5]

A good history of a firm that is no more.

[Gabriella Acuna · Rating 4 out of 5]

what goes up must come down