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Jimmy Cayne, the former chairman of Bear Stearns, has broken his silence on the events that led to the collapse of the 85-year-old Wall St firm, revealing that he was bewildered by the credit crisis and became seriously ill as the company's problems mounted.
The septuagenarian broker, who ran Bear Stearns from 1993, was given a 50 per cent chance of survival after being rushed to hospital with a prostate infection last September.
The incident kept him away from the office for a fortnight and led to him losing 14kg. And, in an interview with Fortune magazine to be published this month, Cayne reveals he ordered a car rather than an ambulance to take him to the hospital on the morning of September 11 because, in the febrile stock market atmosphere, he feared news of his illness would leak and send Bear Stearns shares tumbling.
Bear Stearns had been at the centre of the credit crisis since last June, when two of its internal hedge funds collapsed. The firm lost US$1.6 billion trying to prop up the funds, leading investors to fear for its financial future, and its reputation was badly tarnished. "That was a period of not seeing the light at the end of the tunnel," he told Fortune. "It was not knowing what to do."
Ultimately, in March this year, rumours about Bear Stearns' financial health spiralled into a full-blown crisis of confidence among its trading partners.
Cayne saw the value of his stake in the company slashed by about US$1 billion when it agreed an emergency sale to JPMorgan Chase, reducing his personal fortune to US$600 million.
"When you become roadkill, when you happen to have lost some weight and you're not really healthy, but you know one thing - you know that you have worked your ass off and you're not smart enough to know the answer - that's tough."
- INDEPENDENT
