FOX Business anchor Liz Claman grabbed an advance copy of a book about the fall of Bear Stearns written by an anonymous insider (a senior managing director who sat on the derivatives desk. Can’t be too many of those.) It would be nice if the book contained some titillating new dirt about who screwed up and how, but, alas, the MD seems to have fallen into to the same self-serving trance of denial as Alan Schwartz, Jimmy Cayne, and the executives who sold a sexy story to Vanity Fair last month.
Specifically, the book blames:
- Goldman Sachs
- Hank Paulson (who wanted to nuke Bear Stearns ever since it refused to help out Long Term Capital Management in the late 1990s)
- A conspiracy of shortsellers soon to be busted by the SEC.
As always, we can understand why senior management at Bear Stearns wants desperately to believe that the firm was the victim of a hit job. At some point, however, we hope the pain recedes far enough into history that the execs can look in the mirror and see the real reason Bear Stearns no longer exists: A few folks in senior management bet the company…and lost.
Here’s Liz Claman on what the book has to say:
“Anonymous” makes the case that leaked emails out of Goldman Sachs gave enough people enough information to start heavily shorting the stock to make major money off Bear’s demise. Keep in mind that, at the time, Bear was said to still have $17 Billion dollars in cash on the books but the authors say as soon as someone at Goldman pressed “send to all recipients” on one particular email that indicated it would no longer serve as a go-between for investors and Bear, Bear didn’t stand a chance. It was trapped and bleeding. Not even chewing its own leg off could get it out of that trap. The authors also believe that Treasury Secretary Henry Paulson may have held a grudge against Bear dating back to the bailout of hedge fund Long Term Capital Management back in 1998. Back then, Paulson was the CFO of Goldman Sachs which helped with the LTCM bailout. When asked to join the “Let’s-save-LTCM-for-bad-bets-it-made” party, Bear flat out refused to participate. Did Paulson have a long memory? Did he try a little less valiantly to save Bear because Bear wouldn’t save LTCM? Fox Business spoke to the Treasury Department’s press spokesperson Brooklyn McLaughlin this morning who issued this statement: “Department of Treasury hadn’t seen the book and declines to comment”
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