fi-cri fallout

Nothing Could Have Been Done to Prevent the Collapse of Bear Stearns, Says Former CEO

That he was out golfing or playing bridge or getting high for pretty much all of the year before the collapse of his firm is immaterial, former Bear Stearns CEO Jimmy Cayne plans to explain to the Financial Crisis Inquiry Commission in a few minutes, according to his prepared remarks. Even if he had been fully checked in, even if he or anyone had done the due diligence required to notice that nearly all of the mortgage-backed securities they had been stockpiling like something out of A&E’s Hoarders were garbage, there was simply nothing he or anyone could have done to prevent the firm from going under.

Subsequent events show that Bear Stearns’ collapse was not the result of any actions or decisions unique to Bear Stearns. Instead, it was due to overwhelming market forces that Bear Stearns, as the smallest of the independent investment banks, could not resist. Only a few months after Bear Stearns collapsed, the same market forces caused the collapse and near-collapse of much larger institutions, such as Lehman Brothers. The efforts we made to strengthen the firm were reasonable and prudent, although in hindsight they proved inadequate. Considering the severity and unprecedented nature of the turmoil in the market, I do not believe there were any reasonable steps we could have taken, short of selling the firm, to prevent the collapse that ultimately occurred.

Nope, nothing. Not one thing. Now, if you don’t mind, Jimmy has to run; he has a tee time set up and he doesn’t want to be late.

Prepared Remarks and Testimony []
Live Video: Probe Looks for Link Between “Shadow Banking System” & Banking Crisis [CSpan]

Nothing Could Have Been Done to Prevent the Collapse of Bear Stearns, Says Former CEO