Wednesday, the firms chief executive, James E. Cayne, called Mr. Spector into his spacious office on the sixth floor of the Bear Stearns building on Madison Avenue. Sitting behind his half-moon desk surrounded by computer terminals, Mr. Cayne told Mr. Spector that he wanted his resignation.
I have to do this, he said, according to people who were briefed on the conversation. I cant work with you anymore.
Early that evening, J.P. Morgan sent an in-house lawyer to Bear Stearns's headquarters with an official default notice. But a Bear Stearns receptionist told the lawyer that the firm was closed for business, and that the documents couldn't be accepted, people familiar with the matter say.
Forget Cramer. In England, people flush with insurance cash replacing flood-sodden furniture just might force the hand of the central bank in raising rates again. Even blame-it-on-the-weather is undergoing a renaissance of derivatives.
"On the afternoon of June 14, J.P. Morgan's investment banking co-chief, Steven Black, and his top risk officer had a tense phone call with Mr. Spector, in which the lender urged Bear Stearns to give the fund some emergency credit, participants in the call say.
Calling the J.P. Morgan executives "naïve," Mr. Spector said Bear Stearns was the resident expert in the mortgage business, recalls one participant, and that the lenders should back off.
Early that evening, J.P. Morgan sent an in-house lawyer to Bear Stearns's headquarters with an official default notice. But a Bear Stearns receptionist told the lawyer that the firm was closed for business, and that the documents couldn't be accepted, people familiar with the matter say.
The blow to Bear Stearns's reputation, however, caused the firm to reverse course. Late the following week, after hearing a presentation from Bear Stearns's in-house mortgage team suggesting that the older fund might still contain value, the firm's executive committee authorized a secured loan to the less-leveraged fund of up to $3.2 billion. The fund ended up borrowing $1.6 billion, which it didn't repay entirely, leaving Bear Stearns's loan officers to seize the collateral remaining in Mr. Cioffi's fund. Bear Stearns could lose much of the $1.3 billion the fund still owes it, public filings indicate."
why shouldn't Spector be fired? He was the multi-decade mortage guru who ran the mortgage group and laid the multi-decade foundation for the Bears' exposure to sub-prime, Alt-A and the potentially toxic waste of CDO residuals . . . . . and Spector was apparedently insisting back in June that there wasn't an a crisis.
I wonder if anyone at Bear Stearns (Spector, Cayne, Old Greenberg, ANYBODY even) ever recognized that they were creeping ever so slowly out on a shakey limb that would end up potentially betting the survival of the firm on the sub-prime and Alt-A sectors of the mortgage market?
So, if Bear Stearns stands to lose as much as $1.3 Billion on the 'less leveraged' fund, who was left holding the bag on the more highly leveraged fund and just how much did they lose?
Lumpeninvestor - Note that Jimmy Cayne, in that book, (1) asks to invest without ever meeting any of the principles and then (2) is the one person at the table who said nothing should be done for LTCM.
dis - The comments at your link are spot-on.
I said this at Marginal Utility and I'll say it here: with its new management configuration—and Jeff Mayer is eminently capable—Bear isn't worth it's Book Value.
$32 mill a year compensation!!! If big wigs at Bear has spent time reading calculatedrisk, in stead of playing bridge, they would have seen this coming two years ago.
I'm just a nickel and dime hard money lender, and the pending disaster was obvious. Making loans with pooled funds has always been a formula for disaster. Oh, how greed blinds.
Also from the NYT
Bear Stearns Ousts a Top Executive
Wednesday, the firms chief executive, James E. Cayne, called Mr. Spector into his spacious office on the sixth floor of the Bear Stearns building on Madison Avenue. Sitting behind his half-moon desk surrounded by computer terminals, Mr. Cayne told Mr. Spector that he wanted his resignation.
I have to do this, he said, according to people who were briefed on the conversation. I cant work with you anymore.
Well.. Thanks for being the scapegoat. now get the f#ck out.
It's Bush-style management - the king is never wrong, just poorly advised at times.
Early that evening, J.P. Morgan sent an in-house lawyer to Bear Stearns's headquarters with an official default notice. But a Bear Stearns receptionist told the lawyer that the firm was closed for business, and that the documents couldn't be accepted, people familiar with the matter say.
HAHAHA!
Who's hiding from the bill collectors now?
I'll come up with the assets next week, I swear!
They were the smartest guys in the room.
I'm currently reading When Genius Failed. Interesting to see the same players popping up again.
Forget Cramer. In England, people flush with insurance cash replacing flood-sodden furniture just might force the hand of the central bank in raising rates again. Even blame-it-on-the-weather is undergoing a renaissance of derivatives.
It was a flood alright. A flood of liquidity.
Inflation set to rise in aftermath of floods |
Business |
The Observer
Interesting thoughts from and old college friend Of Warren Spector.
Conversation » WS Journal says Bear will “oust” Warren Spector, President, COO and St John’s College grad
Assuming that this is true:
"On the afternoon of June 14, J.P. Morgan's investment banking co-chief, Steven Black, and his top risk officer had a tense phone call with Mr. Spector, in which the lender urged Bear Stearns to give the fund some emergency credit, participants in the call say.
Calling the J.P. Morgan executives "naïve," Mr. Spector said Bear Stearns was the resident expert in the mortgage business, recalls one participant, and that the lenders should back off.
Early that evening, J.P. Morgan sent an in-house lawyer to Bear Stearns's headquarters with an official default notice. But a Bear Stearns receptionist told the lawyer that the firm was closed for business, and that the documents couldn't be accepted, people familiar with the matter say.
The blow to Bear Stearns's reputation, however, caused the firm to reverse course. Late the following week, after hearing a presentation from Bear Stearns's in-house mortgage team suggesting that the older fund might still contain value, the firm's executive committee authorized a secured loan to the less-leveraged fund of up to $3.2 billion. The fund ended up borrowing $1.6 billion, which it didn't repay entirely, leaving Bear Stearns's loan officers to seize the collateral remaining in Mr. Cioffi's fund. Bear Stearns could lose much of the $1.3 billion the fund still owes it, public filings indicate."
why shouldn't Spector be fired? He was the multi-decade mortage guru who ran the mortgage group and laid the multi-decade foundation for the Bears' exposure to sub-prime, Alt-A and the potentially toxic waste of CDO residuals . . . . . and Spector was apparedently insisting back in June that there wasn't an a crisis.
I wonder if anyone at Bear Stearns (Spector, Cayne, Old Greenberg, ANYBODY even) ever recognized that they were creeping ever so slowly out on a shakey limb that would end up potentially betting the survival of the firm on the sub-prime and Alt-A sectors of the mortgage market?
So, if Bear Stearns stands to lose as much as $1.3 Billion on the 'less leveraged' fund, who was left holding the bag on the more highly leveraged fund and just how much did they lose?
Bear's achilles heel is a lack of diversity:
Bear Stearns, which has a huge mortgage business but a less diverse mix of other business than its investment-banking peers, has been the hardest hit.
Anarchus (8:01 am) - Yes.
Lumpeninvestor - Note that Jimmy Cayne, in that book, (1) asks to invest without ever meeting any of the principles and then (2) is the one person at the table who said nothing should be done for LTCM.
dis - The comments at your link are spot-on.
I said this at Marginal Utility and I'll say it here: with its new management configuration—and Jeff Mayer is eminently capable—Bear isn't worth it's Book Value.
The arrogance here is appalling. Looks like somebody's bluff got called! Good riddance, Bear.
So what happens to the guy? He has inside info that might be 'priceless'.
$32 mill a year compensation!!! If big wigs at Bear has spent time reading calculatedrisk, in stead of playing bridge, they would have seen this coming two years ago.
I'm just a nickel and dime hard money lender, and the pending disaster was obvious. Making loans with pooled funds has always been a formula for disaster. Oh, how greed blinds.
I see criminal negligence from top to bottom.
Lee