Jimmy Cayne has been speaking at length with Fortune’s William Cohan, and has now managed to tell his side of the story.
No wonder people don’t like him much: he comes across really badly even here. After reading the piece, you get the impression of Cayne as a vindictive, ungrateful, out-of-touch executive who’s more willing to lay the blame for Bear’s demise at the feet of Goldman Sachs than he is to fly commercial, even in an emergency. Here’s one paragaph from the 5,800-word article:
As Bear Stearns’s liquidity dried up in March, Cayne was playing bridge in Detroit, at the North American Bridge Championships. When playing tournaments, Cayne, who only recently got his first cell phone and has no BlackBerry, was hard to reach. While he saw Schwartz’s March 12 appearance on CNBC – in which Schwartz said he was not aware of any imminent threat to Bear Stearns’s liquidity – from his hotel room in Detroit, Cayne was not told of the firm’s crisis until late Thursday night, March 13, when the "run on the bank" was already well along. Cayne was still playing bridge in Detroit when the board met by conference call that night, so he joined the call late. He didn’t know about the Fed’s rescue financing on Friday or that the stock had closed at around $30 that day after the credit agencies downgraded the firm. He couldn’t get a private flight out of Detroit until four in the afternoon on Saturday (and no, he didn’t think to call Northwest), so he arrived at Bear’s office in New York at around 6:30 that night. "When I walked in they said, ‘It’s $8 to $12 a share. That’s the deal with J.P. Morgan,’" remembers Cayne.
Cayne, it turns out, was inordinately cocky even on the first day he interviewed with Ace Greenberg for a job at Bear Stearns:
In an effort to make a little small talk, Greenberg asked Cayne if he had any hobbies. Along with magic and yo-yos, bridge was a serious interest of Greenberg’s. "And I said, ‘Yes, I play bridge,’" Cayne recalled. "You could see the electric light bulb. He says, ‘How well do you play?’ I said, ‘Mr. Greenberg, if you study bridge the rest of your life, if you play with the best partners and you achieve your potential, you will never play bridge like I play bridge.’"
Improbably, after those beginnings,
Greenberg became Cayne’s mentor at the firm. "Greenberg had very few friends," Cayne remembers of those years when he was Ace’s protege. "And I was one of them."
Of course, the two didn’t remain buddies for long: Cayne ousted Greenberg as CEO in 1993, and made no secret of his disdain for the elder banker.
Much more recently, Cayne ousted Bear president Warren Spector for an interesting crime. The ouster happened after Cayne had agreed to lend $1.6 billion to Ralph Cioffi’s failed High-Grade hedge fund: in the end, Bear lost some $1.2 billion of that money. Yet it was an earlier and much smaller decision which led to the defenestration of Warren Spector:
Cayne fired Spector on Aug. 5 – the final straw being Spector’s decision to invest the $25 million in the hedge fund.
Was the $25 million investment bound to succeed? No. But if it had succeeded, it would have obviated the need for the $1.6 billion loan. And in the end, losing $1.2 billion is 48 times worse than losing $25 million. But still Cayne refused to take responsibility for his own actions; indeed, he strongly implies to Cohan that Ace Greenberg, of all people, had pressured him to extending the loan. As if Cayne would ever do something just because Greenberg told him to!
Near the end of the piece, Cayne starts pointing fingers and asking for investigations of Bear’s downfall:
He thinks a good place to start such an investigation would be with those firms that profited the most – to the tune of billions of dollars – from Bear’s demise, including Goldman Sachs; hedge fund Paulson & Co., which cleared through Bear Stearns and whose principal, John Paulson, was a former Bear Stearns investment banker; and Kyle Bass, the head of Dallas-based Hayman Capital.
Does Cayne have any evidence that Goldman, Paulson, and Hayman profited "to the tune of billions of dollars" when Bear went under? If so, I’d like to see it; until then, I’d really rather that he shut up.