Former Bear Stearns boss Jimmy Cayne ... conceded he hadn’t reined in leverage at Bear and admitted he was at a loss to decide the best path to take as early as the summer of 2007.

Bear suffered a brief run on the bank last summer after its hedge fund debacle. Even that didn’t persuade the then chairman and chief executive how crucial it was to shore up the firm's capital – something that might have been done in various ways, for instance by reducing its reliance on short-term funding.

Cayne’s admission that he didn’t know what to do, even last summer, is extraordinary. If that was the case, he should have handed the reins to someone else with more ideas – or been forced to do so by Bear's board.

Bear had $11.1 billion in tangible equity capital supporting $395 billion in assets, a leverage ratio of more than 35 to one. And its assets were less liquid than those of many of its competitors.

[B]y March 10, the problem had metastasized into something more dire than a rumor. Late the preceding Friday, a major bank - accounts differ on which - had rebuffed Bear's request for a short-term $2 billion loan... [T]he sign was unmistakable: Credit was drying up.

Even as the firm frantically negotiated a rescue package, Bear executives continued to try to convince the world that everything was under control.

Shorting - usually carried out by borrowing shares you think will fall in value, selling them and then buying them back more cheaply to turn a profit - is a legitimate investment technique, but the practice is in danger of being demonized.

Usually something of a minority pursuit, dire market conditions have led to a boom in short-selling.

Some may feel there is a distasteful aspect to shorting in general, since it involves profiting from a company's distress. The arguments are a little more complex than that, however. Shorting can be a healthy practice, bringing a dose of realism to markets that are usually biased towards boosting shares...

As for the deliberate and malicious destruction of value and people's lives, what about the poor Americans who are being made homeless because they were lured into sub-prime mortgages? Who is responsible for that?

June 24, 2008
JP Morgan is trying hard to beach as many BSC shareholders as possible before the coming tidal wave of litigation. The strategy JP Morgan seems to have decided upon is to offer multiple incentives to former Bear employees, each with its own agreement, each with its own litigation waiver clause.

June 21, 2008

EVENTS SURROUNDING BEAR STEARNS' 2007 SUBPRIME HEDGE FUND FRAUD ARE LOOKING MORE AND MORE LIKE THE PROXIMATE CAUSE OF STOCK LOSSES SUFFERED BY BEAR STEARNS EMPLOYEE SHAREHOLDERS AND OTHER BEAR INVESTORS...

June 19, 2008
This is not about mismanagement of a hedge fund investment strategy,” said Mark J. Mershon, the head of the New York office of the FBI, at a news conference Thursday. It is about premeditated lies to investors and lenders.

May 12, 2008

"Often being part of a class action lawsuit is not financially advantageous to an individual. Even though the defendant named in the case may be required to pay out a large sum of money, one individual who is part of the class action will only receive a small portion of that sum."

May 27, 2008
PART ONE IN THE WALL STREET JOURNAL'S ACCOUNT OF THE FALL OF BEAR STEARNS

May 28, 2008

PART TWO IN THE WALL STREET JOURNAL'S ACCOUNT OF THE FALL OF BEAR STEARNS

May 29, 2008

PART THREE IN THE WALL STREET JOURNAL'S ACCOUNT OF THE FALL OF BEAR STEARNS

May 27, 2008

While most who opt out of class securities settlements are institutions with losses in the tens of millions of dollars, Mr. Sherman said he thinks such a strategy could work even for those who lost much less. "I absolutely think it's viable," he said.

The lawyer also warned that Bear is asking employees taking severance packages to sign a "comprehensive waiver" that would preclude joining any securities suit against the company or its likely successor, JPMorgan.

May 8, 2008

A feud has erupted in the boardroom of Bear Stearns with directors trying to pin the blame on each other for the Wall Street firm's spectacular collapse.

Bear's unofficial patriarch, its 80-year-old former boss Alan Greenberg, has accused the chairman Jimmy Cayne of ignoring warnings as the credit crunch began to bite last summer.

May 6, 2008 

The demise of the [Bear Stearns] . . . was a collective failure of the governing five-man executive committee that over the years became so fixated on growing the firm's book value and expecting the stock price to follow that it lost sight of the fact that the firm's concentrated, under-hedged exposure to the residential mortgage market left Bear vulnerable when the credit crisis broke last summer.

March 14, 2008

Bear Stearns had almost taken offense when skeptics challenged the firm's ability to weather the credit storm.

After shocking the market with poor results in December, Sam Molinaro, the company's chief financial officer, hinted the worst was over. 

...[the] timing [of top Bear Executives] last winter was notable for its good fortune, if nothing else. Once again it shows that company insiders seem to prove pretty good at knowing when their own stock is overvalued and when the future risks do not justify the price.

The implosion of Bear Stearns is still making news. Business Week Online has taken a close look at confidential financial statements and has concluded that the funds were virtually built to crumble if the market turned down. Which of course it did.

Not everyone else gorged at the trough of mortgage backed securities the way Bear did: They were the most aggressive player in the mortgage backed underwriting arena, their internal hedge funds were amongst the most heavily leveraged to the junk. Indeed, of all the banks on Wall Street, one in particular stands out for how heavily tied they were to the mortgage securitization industry: Bear Stearns.