Raising Cayne

Over the summer, I asked why Warren Spector was taking the fall for Bear Stearn's (BSC) collapse. I didn't think high-flyer Warren Spector should be exempt from the fallout which took place under his supervision. But it seemed to me that James Cayne, as the top man, should take the fall.

Since then, of course, Stan O'Neal is out at Merrill Lynch (MER). And Thursday the Wall Street Journal has a revealing piece by Kate Kelly about how Cayne aquitted himself while the credit crisis unfolded, including leaving on Thursdays and spending Fridays at the golf club and attending a bridge tournament in Nashville where he was unreachable without cell phone or pager. In all, he missed work 10 of the 21 workdays in July when the company went through the ringer. Dealbreaker, the Wall Street blog, whacked me for asking about Cayne's ouster saying that I was using a political model. But the idea that the buck stops here is not confined to politics. Dealbreaker's John Carney wrote:

Cooper's model is clearly a political one--although we can't remember when the last time a top guy resigned after being disgraced by the activities of his underlings either. Well, we've heard about Nixon but that was a long, long time ago! And Nixon is not usually held up as a model of American leadership. So let's say Cooper's model is an idealistic one that is rarely realized in reality.

It's hard not to suspect that Cooper is trying for some sort of hobgoblinistic, liberal consistency. Liberals think Bush should step down or get impeached because of the activities of, say, Alberto Gonzalez. So that means everyone should step down when their underlings allegedly lead things off the rails.

Okay, I didn't say everyone should step down. I don't think Bush should resign or be impeached. Having been a Schedule C appointee in the Reagan administration, I'll take being called a liberal with a smile. But I do plead guilty to clinging to the quaint notion that the person at the top of an organization should take responsibility when an organization collapses. Read Kate Kelly's piece and see if you don't agree.