Bear Stearns chief blames everyone but himself for bank's collapse

[marmar]

from the Guardian UK:



Bank chief blames rumours and market fixers for Bear's collapse
Andrew Clark in New York The Guardian, Friday April 4 2008

The head of the crisis-hit investment bank Bear Stearns has blamed short sellers and market manipulators for spreading negative financial rumours to induce a collapse of the 85-year-old Wall Street institution.

Bear's chief executive, Alan Schwartz, told the senate's finance committee in Washington that his firm had been as well-capitalised as its rivals but it suffered an evaporation of confidence last month fuelled by falsehoods.

"As an observer of the markets, it looked like more than just fear," said Schwartz. "It looked like people wanted to induce a panic."

He told senators that he never dreamed a run on the bank could happen so quickly. Bear lost $10bn of liquidity in a single day, with its financial resources plummeting from $12.4bn to $2bn on March 13 as customers, trading partners and investors fled.

"The minute we got a fact out, a different set of rumours would start," said Schwartz, who testified that the "nature and pattern" of the damaging whispers made him suspicious they were being circulated deliberately. He urged regulators to investigate the debacle. "There are laws against market manipulation and there used to be laws against spreading rumours about banks," he said. ..........(more)

The complete piece is at: http://www.guardian.co.uk/business/2008/apr/04/bearstearns.creditcrunch

[Fenris]

1. He can't be blamed! He was at a bridge tournament at the time!

[sharesunited]

5. That was James Cayne chairman of the board, I think.

Somebody who doesn't need to be at the office every day.

[Yael]

2. Of course he does

While he worked his 28 hour weeks and played golf and bridge while the ship was going down...

[MadMaddie]

3. If rumors brought down the bank then they

had more problems then they are letting on to.

[Yavin4]

4. I Thought It Was Because Bear Bought Worthless Mortgages

And then couldn't re-sell them because they were worth zero. Silly me. It was rumors.