{"id":388589,"date":"2022-01-02T05:53:02","date_gmt":"2022-01-02T02:53:02","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/lessons-of-jimmy-caynes-bear-stearns-historic-rise-and-fall\/"},"modified":"2022-01-02T05:53:02","modified_gmt":"2022-01-02T02:53:02","slug":"lessons-of-jimmy-caynes-bear-stearns-historic-rise-and-fall","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/lessons-of-jimmy-caynes-bear-stearns-historic-rise-and-fall\/","title":{"rendered":"#Lessons of Jimmy Cayne\u2019s Bear Stearns historic rise and fall"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a243b3fe5535\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a243b3fe5535\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/lessons-of-jimmy-caynes-bear-stearns-historic-rise-and-fall\/#Bailouts_galore_in_2008\" >Bailouts galore in 2008<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/lessons-of-jimmy-caynes-bear-stearns-historic-rise-and-fall\/#Reign_as_an_oracle\" >Reign as an oracle<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#Lessons of Jimmy Cayne\u2019s Bear Stearns historic rise and fall<\/strong>&#8221;<\/p>\n<div>\n<aside class=\"single__inline-module alignleft\">\n<div class=\"inline-module inline-module--columnist inline-module--author\">\n<div class=\"inline-module--author__img\">\n            <img decoding=\"async\" width=\"76\" height=\"69\" src=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2013\/08\/Gasparino_Charles_headshot.png?w=76&amp;h=69&amp;crop=1\" class=\"attachment-nyp_columnist size-nyp_columnist\" alt=\"Charles Gasparino\" loading=\"lazy\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2013\/08\/Gasparino_Charles_headshot.png?w=152 152w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2013\/08\/Gasparino_Charles_headshot.png?w=114 114w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2013\/08\/Gasparino_Charles_headshot.png?w=76 76w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2013\/08\/Gasparino_Charles_headshot.png?w=38 38w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2013\/08\/Gasparino_Charles_headshot.png 706w\" sizes=\"auto, (max-width: 76px) 100vw, 76px\"\/>      <\/div>\n<\/div>\n<\/aside>\n<p>Jimmy Cayne is no longer a household name on Wall Street, his fame darkened by the last couple of years as CEO of the ill-fated investment bank Bear Stearns.\u00a0\u00a0<\/p>\n<p>But Cayne\u2019s story is far more complex. It\u2019s one of incredible achievement as well, and even more, it should be studied by business schools as a parable of how business leaders can get stuff so right for so long, only to be defined by a couple of bad and avoidable mistakes.\u00a0<\/p>\n<p>By shining a light on what Cayne did right and wrong, maybe we can teach not just the new class of CEOs, but all these know-it-all meme-stock traders \u2014 who think they\u2019re infallible because they\u2019ve made a few bucks during this long bull market \u2014 that failure is \u00adalways lurking around the corner.\u00a0<\/p>\n<p>Cayne died Tuesday at the age of 87. Do a Google search and you will find countless stories blaming him for the risk-taking that doomed Bear Stearns in the initial stages of the 2008 financial crisis. His bridge playing while Bear was burning; his more-than-occasional penchant to smoke some pot.<\/p>\n<p>All of this, based on my knowledge, was true to some extent, but shouldn\u2019t be defining. Responsibility for Bear\u2019s risk-taking ultimately falls on his shoulders, but the doomed strategies were also carried out by people who also were part of Bear\u2019s management team.\u00a0<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Bailouts_galore_in_2008\"><\/span>Bailouts galore in 2008<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Bear was certainly not the only firm to succumb to risk. Every one of them, except maybe JPMorgan under the steady hand of Jamie Dimon, needed a bailout in 2008. And yes, Jimmy played bridge and smoked some weed, but I don\u2019t recall any CEO being chained to his desk except when the proverbial crap was hitting the fan. As for the marijuana, a close friend of Cayne\u2019s told me it was to soften the symptoms of a medical condition. I never saw it impact his ability to work and I knew him better than anyone on the beat.\u00a0<\/p>\n<p>Amid all these titillating snippets, it\u2019s easy to understand why history has been unkind and unfair to Cayne\u2019s legacy. He was a college dropout who sold sheet metal and took a turn as a professional bridge player and then went on to sell municipal bonds. His love of bridge and vaulting ambition got Cayne a meeting with Ace Greenberg, a stock trader and risk manager of enormous skill, and soon-to-be CEO of Bear Steans.<\/p>\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"1024\" height=\"682\" src=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/01\/Jimmy-Cayne2.jpg?quality=90&amp;strip=all&amp;w=1024\" alt=\"James &quot;Jimmy&quot; Cayne, former chairman and chief executive officer of Bear Stearns Cos.,\" class=\"wp-image-20685399\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/01\/Jimmy-Cayne2.jpg?quality=90&amp;strip=all&amp;w=1535 1536w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/01\/Jimmy-Cayne2.jpg?quality=90&amp;strip=all 1024w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/01\/Jimmy-Cayne2.jpg?quality=90&amp;strip=all&amp;w=512 512w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\"\/><figcaption>Jimmy Cayne always caught the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>\u2019s attention from his marijuana smoking habit.<\/figcaption><figcaption><span class=\"credit\">Bloomberg via Getty Images<\/span><\/figcaption><\/figure>\n<p>Greenberg was also a manager who looked for recruits that had what he called \u201cPSD\u201d \u2014 they were Poor (by Wall Street standards), Smart and deeply Determined. Cayne became the template for the term.\u00a0<\/p>\n<aside class=\"single__inline-module alignright\">\n    <\/aside>\n<p>Of course, it didn\u2019t hurt that Greenberg was also an avid bridge player, though not at Cayne\u2019s level. That skill of strategy and reading people\u2019s intentions soon brought Cayne both success and advancement at Bear Stearns. He reeled in some of the firm\u2019s biggest clients. In the mid-1970s, when NYC was on the verge of bankruptcy, big banks avoid city debt. Cayne rolled the dice adroitly that NYC, home of Wall Street and international finance, would recover no matter how bad its leadership had become.\u00a0<\/p>\n<p>He began making markets in city bonds. Leadership changed; the city\u2019s budget improved. Cayne made a fortune for Bear and himself.\u00a0<\/p>\n<p>He was also on the fast track to becoming CEO, which he did in 1993, replacing Ace, who remained as chairman. Their relationship, which started out as almost paternal, had frayed. But the Cayne-Greenberg team produced a juggernaut; Bear Stearns\u2019 stock exploded. It was one of Wall Street\u2019s smallest firms, but regularly bested the biggest in earnings power.\u00a0<\/p>\n<p>Remarkable, considering the way it ended for Bear, that the firm stayed out of trouble. I credit the bridge player in Cayne. When the hedge fund Long-Term Capital imploded in 1998, Bear was the only major trading shop untouched. Cayne didn\u2019t like its esoteric investments in weird bonds. Bear also avoided the excesses of the dotcom era because Cayne didn\u2019t want to spend big bucks on analysts touting stuff like Pets.com.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Reign_as_an_oracle\"><\/span>Reign as an oracle<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>By 2006, Cayne was a billionaire based on his holdings of Bear Stearns stock. He had assumed an exalted status on Wall Street. Rival CEOs began seeking his advice as he dispensed snarky bon mots as if they were pearls of Wall Street wisdom.\u00a0<\/p>\n<p>But he also began to believe his own BS that his past performance guaranteed future success. That Greenberg had traded through some rough markets was increasingly ignored by the new regime.\u00a0<\/p>\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"1024\" height=\"682\" src=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/01\/Jamie-Dimon.jpg?quality=90&amp;strip=all&amp;w=1024\" alt=\"JP Morgan CEO Jamie Dimon\" class=\"wp-image-20685417\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/01\/Jamie-Dimon.jpg?quality=90&amp;strip=all&amp;w=1535 1536w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/01\/Jamie-Dimon.jpg?quality=90&amp;strip=all 1024w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/01\/Jamie-Dimon.jpg?quality=90&amp;strip=all&amp;w=512 512w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\"\/><figcaption>JP Morgan CEO Jamie Dimon tried to buy the remains of Jimmy Cayne\u2019s ailing Bear Stearns firm until it was too late.<\/figcaption><figcaption><span class=\"credit\">AP Photo\/Michel Euler, Pool, File<\/span><\/figcaption><\/figure>\n<p>Cayne rebuffed attempts by Dimon to look into buying Bear. Cayne\u2019s rationale to me at the time: Dimon couldn\u2019t afford what Bear was really worth.\u00a0<\/p>\n<aside class=\"single__inline-module alignright\">\n    <\/aside>\n<p>Cayne was always one of the highest paid execs on Wall Street, but his pay reached an astronomical $40 million for 2006, the check delivered in 2007. That\u2019s when the firm\u2019s excruciating descent began, with the implosion of two of its hedge funds tied to the deteriorating mortgage-bond market.\u00a0<\/p>\n<p>By early 2008, Cayne was out as CEO, and by March of that year, Bear was forced to sell out to JPM at a final price of $10 per share. When Dimon was snooping around years earlier, its shares traded around $150 or more.\u00a0<\/p>\n<p>It might sound trite, but the best CEOs learn from their failures small and large. Jamie Dimon being booted by Sandy Weill at Citigroup undoubtedly made him a better CEO years later. Larry Fink, as a young bond trader in the 1980s, lost a ton of money but went on to become maybe Wall Street\u2019s best risk manager as CEO of the BlackRock money-management empire.\u00a0<\/p>\n<p>Both were laid low by failures enough to understand they were fallible, and knew they were one trade away from ignominy. I never got that sense from Jimmy, which was his undoing. Meme-stock investors should take note.\n                        <\/p><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/nypost.com\/2022\/01\/01\/lessons-of-jimmy-caynes-bear-stearns-historic-rise-and-fall\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;#Lessons of Jimmy Cayne\u2019s Bear Stearns historic rise and fall&#8221; Jimmy Cayne is no longer a household name on Wall Street, his fame darkened by the last couple of years as CEO of the ill-fated investment bank Bear Stearns.\u00a0\u00a0 But Cayne\u2019s story is far more complex. It\u2019s one of incredible achievement as well, and even&#8230;<\/p>\n","protected":false},"author":1,"featured_media":388590,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/01\/Jimmy-Cayne.jpg?quality=90&strip=all&w=1024","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[122902,110484,122780,11154,70791,70359,71407,70360],"class_list":["post-388589","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-1-1-22","tag-2008-financial-crisis","tag-bear-stearns","tag-ceos","tag-jamie-dimon","tag-stocks","tag-trading","tag-wall-street"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/388589","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=388589"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/388589\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/388590"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=388589"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=388589"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=388589"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}