Nobody's Fault

May 5 (Bloomberg) -- James “Jimmy” Cayne, the former chairman and chief executive officer of Bear Stearns Cos., will blame market forces and loss of confidence in his firm for its collapse in 2008, according to a person who has reviewed his testimony before a U.S. investigative panel. “The market’s loss of confidence, even though it was unjustified and irrational, became a self-fulfilling prophecy,” Cayne said in written testimony

Alan Schwartz, who succeeded Cayne as CEO and negotiated Bear Stearns’s fire sale to JPMorgan will blame the fall on rumors. “We did not foresee the extent to which housing prices had been driven to unsustainable levels,” Schwartz will say.

Cayne, who loved to play bridge, pulled away from hands-on management roles, spending more time away from his office even while Bear Stearns was running into trouble. When the firm ran out of money in March 2008 and faced a bank run from its hedge-fund clients and short-term creditors, Cayne was at a bridge tournament in Detroit. He couldn’t fly back to New York in time to take part in talks to sell the firm to JPMorgan under
government pressure.

No worries.