Bryan Burrough, author of ‘Barbarians at the Gate: The Fall of RJR Nabisco,’ tosses his 10,000 words into the Bear Stearns (NYSE:BSC) meltdown pot in Vanity Fair this month, featuring a quote from an unnamed vice-chairman of an unnamed investment bank.
“If I had to pick the biggest financial crime ever perpetuated,” he concludes, “I would say, ‘Bear Stearns.”’
Well, that understandably anonymous individual definitely needs to get out more.
The story adds some new names to the unindicted co-conspirators file, naming Stevie Cohen’s SAC Capital, which “vehemently” denied the allegations, and “Jeff Dorman, who briefly served as global co-head of Bear’s prime brokerage business until resigning to take a similar position at Deutsche Bank (NYSE:DB) last summer.”
“We heard Dorman was saying things last summer,” says a Bear executive. “At the time we reached out to Deutsche Bank and told them he better stop it.” (Asked about the allegation, a Deutsche Bank spokeswoman acknowledged that Bear had sent its executives a letter last August asking Dorman not to solicit its clients, as he had agreed upon leaving Bear. Deutsche Bank replied that he wasn’t. The exchange didn’t explicitly address what Dorman might have been saying about the firm, nor would the spokeswoman.)
Hmmm. But the distinguishing feature of this contribution to the pathologist’s file is its fisking of the contribution of “trigger-happy [CNBC] reporters” during the week of Mar. 10, when fleeing customers pushed Bear into the abyss. That section includes at least a dozen mentions of the word ‘rumor,’ but omits to mention that virtually all of the so-called rumors—most specifically of clients pulling assets, and counterparties refusing to deal with Bear— were, in fact, true.
“Everyone on Wall Street knows the joke,” says another Bear executive involved in the discussions. “At CNBC, there is simply no adult supervision.”
Nobody could contest that analysis but, amidst the frenzied finger-pointing, there is plenty of evidence that adult supervision was at least as conspicuously lacking at Bear Stearns.
Bringing Down Bear Stearns
by Bryan Burrough
Vanity Fair Aug. 2008