Yesterday, I mentioned a book coming out next week called "House of Cards." It's about the collapse of Bear Stearns. Another excerpt was published today, and holy mackerel is it nasty. It's a brutal attack on our current Treasury Secretary Tim Geithner by Bear Stearns CEO Jimmy Cayne. A friend of mine who used to work on Wall Street says it captures the old-school Street mentality perfectly: "It's a knife fight."
The excerpt was published today in the Wall Street Journal's Deal Journal. Cayne rages against Geithner for waiting until after Bear was sold for $2 a share to open the discount lending window to the Wall Street banks.
Bear had lobbied the Federal Reserve to do it much earlier. Geithner was head of the New York Fed, but Cayne calls him a "clerk." Here's the least profane excerpt from Cayne's tirade:
I'm a very bad enemy. But certain things really--that bothered me plenty. It's just that for some clerk to make a decision based on what, your own personal feeling about whether or not they're a good credit? Who the f-- asked you?
I'm not pointing this out because it adds much value to the discussion. It just underscores the raw tenacity and frankly, viciousness of some of the people who were running these banks. Some people think the boyish-looking Geithner is, in fact, a lightweight -- remember how his first press conference as Treasury Secretary was received?
But come on. Cayne led his company down the path of destruction by ultra-leveraging. Bear was way deep into mortgage-backed securities. Cayne has no one to blame but himself, and he knows it. Last year, Cayne described the way one of his clients responded to losing $1 billion in the Bear collapse: "He's an adult, not a whiner."
There you go. And what's so awful is that people like Cayne took down so many others who didn't deserve it.