Alan C. (Ace) Greenberg - The Rise and Fall of Bear Stearns

Also by Alan C. Greenberg

MEMOS FROM THE CHAIRMAN

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Copyright 2010 by Alan C. Greenberg

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First Simon & Schuster trade paperback edition May 2011

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The Library of Congress cataloged the hardcover edition as follows:

Greenberg, Alan C.
The rise and fall of Bear Stearns / Alan C. Greenberg
with Mark Singer.
p. cm.
Includes index.
1. Bear, Stearns & Co.History21st century. 2. Investment bankingUnited States21st century. 3. Subprime mortgage loansUnited States21st century. 4. Financial crisesUnited States21st century. I. Singer, Mark. II. Title.
HG4930.5.G74 2010
332.660973dc 22 2010005141

ISBN 978-1-4165-6288-7
ISBN 978-1-4391-0142-1 (pbk)
ISBN 978-1-4391-0973-1 (ebook)

To Kathy, Lynne, and Teddy

THE

RISE

AND

FALL

OF

BEAR STEARNS

All photographs courtesy of the author except for the photo of Salim (Cy) Lewis, which is by Bachrach Photography.

With my mother, Esther.

My family. Left to right: me; my brother, Maynard; my mother; my sister, DiAnne; my dad, Ted.

With my dad at a regional track meet in Oklahoma City, where I won the 100-yard and 220-yard dashes for the second consecutive year, 1945.

As a half back at the University of Oklahoma, fall 1945.

Harold C. Mayer, one of the founders of Bear Stearns and a great friend.

Early days on Wall Street. I am second from left.

With John Slade, my mentor at Bear Stearns.

With Mickey Tarnopol, a dear friend who brought a lot of business to Bear Stearns.

On the right is John Rosenwald, a close friend and the best salesman I have ever met. My sister, DiAnne Hirsch, is between us.

Salim (Cy) Lewis, my predecessor as head of Bear Stearns.

The Corporate America bridge team in London to play against the bridge teams from the House of Lords and the House of Commons. Left to right: Warren Buffett, Jimmy Cayne, Malcolm Forbes, George Gillespie, me, Larry Tisch. A pretty well-to-do bunch.

Memos from the Chairman.

With my wife, Kathy. Our 1987 marriage was the smartest thing Ive ever done in my life. Kathy is an attorney and chairman of the board of Cardozo School of Law.

With Kathy, my son, Teddy, and my daughter, Lynne.

With Teddy Kollek, at the time the mayor of Jerusalem, a great friend.

A poster that my colleagues at Bear Stearns made to celebrate my fifty years with the company.

ON MARCH I6, 2008, I WAS AT WORK AT Bear Stearns, but in a distinct departure from my usual routine. For one thing, it was a Sunday, and the last time I had worked weekends was during the 1950s, when the stock market had Saturday trading hours. This particular Sunday was drizzly and grayfitting weather (actually, a squall with golf-ball-size hail plus an earthquake would have been more like it) for confronting a calamity that even in my gloomiest risk calculations I hadnt seen coming. Shortly before noon, I went to our headquarters at 383 Madison Avenue for an emergency meeting of the corporate board of directors. The week just ended had been the most maddening, bizarre, and bewildering in our eighty-five-year history.

Occasional bad news is inevitable, but Ive tried to order my life to avoid getting blindsided. Sixty-one years ago I moved to New York and found work as a clerk at Bear Stearns, an investment firm that had 125 employees. Before I turned forty, I was running the place. At its peak, Bear Stearns employed almost 15,000 people. Along the way, my formal titles included chief executive officer, chairman, and chairman of the executive committee; my principal occupation was and continues to be calculating and managing risks.

My workday typically started off like this: out the door by 8:00 a.m. and at my desk by 8:15, where my morning reading consisted of the Wall Street Journalat home Id already digested the New York Times and the New York Postand printed reports that specified how various departments that handled the firms capital had performed the previous day. If a trader had an especially good day, Id probably call to congratulate him. If the opposite occurred, Id want to find out what happened. Before the markets opened at 9:30, Id usually handled more than a dozen phone calls. As the day progressed, Id be easy to get hold of but hard to keep on the line. Most phone conversations that last longer than thirty seconds, I find, have reached a point of diminishing returns. I have many interests and hobbies, but making small talk isnt one of them.