Barry Ritholtz has an interesting post about Bear Stearns (NYSE: BSC) over at his excellent macro-commentary blog, The Big Picture. In Who is to Blame for Bear Stearn's Demise?, Barry notes the growing list of people and institutions that are being blamed for the fall of the great Bear. One group seems to be missing from the list though: Bear Stearns itself.Those accused of destroying Bear Stearns include the Fed. If only Bernanke had raised interest rates, the housing bubble wouldn't have popped and the credit markets wouldn't have seized up and Bear could have avoided the fatal run on its reserves. The clients who made that run, including Jim Simons from Renaissance Technologies, are also having some fingers pointed at them. If only they hadn't asked for their money back, all would be well. And of course, we can't forget the short sellers, who profited nicely from the astonishing drop in Bear's stock price.
For the most part, these rumors and accusations seem to be coming from current and former Bear employees. And so it's not too surprising that Bear management has not been singled out for blame. But Ritholtz dismisses the finger-pointing, calling the various theories of Bear's collapse "a steaming pile of organic, enzyme-free donkey fazoo." After all, no one forced traders at Bear Stearns to play so hard in the mortgage-backed securities game. Ultimately, poor management and excess risk destroyed the fifth largest investment bank in the country, not some conspiracy of malevolent outside forces.
Comfort Zone Investing: Keep your recovery expectations real
Will Americans have to slim down to fit into their cars?
Starbucks: The next McDonald's
Reader Comments (Page 1 of 1)
3-21-2008 @ 12:06PM
Michael Schneider said...
Today's Wall Street Journal had an interesting item about investment whizz Bill Miller losing a lot on Bear Stearns (as well as his recent jumps into Countrywide and, remember, Pulte Homes). The Journal also noted that Bear Stearns had huge leverage.
3-21-2008 @ 1:18PM
romeo said...
Nixon once said " the buck stops in this office" or words to that extent.
There was only one person occupying each of the only two corporate position which had direct and specific responsibility TO employees (CEO) and shareholders (COB) to insure that the strategic goals of the company enabled the company to maintain its competitve edge through the development of a sound and diversified portfolio of products, services and offerings - each with specific risk management oversight by senior management which would not create an unbalanced or overweighted reliance on any one profit center.
The only person thus responsible for non compliance with these mandated responsibilities was relieved of his CEO responsibilities but remains with his COB position and was last seen at a bridge Tournament and playing golf during these past few months while Bear Burned.
And his name is not Nixon.
And he is still the COB, still playing Bridge and golf despite the fact that he may not have the current backing of the current board of directors.
With this in mind it would be of some interest to contact the current board members and take a pole to determine which Bear employee they feel should be held MOST responsible for what ailes the company now.
3-21-2008 @ 1:52PM
cindy said...
The captian always goes down with the ship that is why the Captain gets paid so much. Stop the blame game and start the excepting game. Except where you went wrong so you are not doomed to repeat the past
3-21-2008 @ 6:53PM
Short Ritholtz said...
Ritholtz comments are pedestrian. If we want to read him we can go here. His Dick Bove comments were a joke, the ass kissing mob will turn on him sooner or later, and he will return to day trading.