TEXT OF INTERVIEW
Kai Ryssdal: The financial crisis is back in the headlines, thanks to troubles in some unnamed European countries. So what we’re gonna do right now is go back a couple years to our beginning, when Bears Stearns collapsed, and JPMorgan snapped it up for basically nothing.
Alan Greenberg literally grew up at Bear Stearns. He started as a clerk and retired almost 60 years later as CEO after turning things over to the guy that many — including Greenberg — blamed for bringing Bear Stearns down, Jimmy Cayne. Greenberg’s new book about the company and his life there is called “The Rise and Fall of Bear Stearns.” Mr. Greenberg, welcome to the program.
Alan Greenberg: Good to be here.
Ryssdal: So here we are two and a little bit years after Bear Stearns was acquired by JPMorgan, perhaps what you might call the first stroke in the financial crisis. How are you feeling now about the way things turned out for the whole financial system?
Greenberg: I feel this way: There were originally hundreds of investment banking firms, until 60 years after I started, there were five investment banking firms left. And we were one of the five. Not one of those five remain intact. And so, the investment bank that you knew and I knew is gone. It will never come back, in my opinion, it served a marvelous purpose, but in the end, it just didn’t work.
Ryssdal: Obviously, I’d imagine you’d regret what happened to Bear Stearns, but did you regret anything you did?
Greenberg: Well, my main regret was the people that worked at Bear Stearns. We had 14,000 fantastic associates, and I was very upset about so many of them losing their job. Kai, you have to understand that I was a very, very small shareholder at Bear Stearns during this period. I owned 15,000 shares of Bear Stearns only. The chairman and CEO at that time owned over six million shares. So, he didn’t want to pay much attention to what I had to say, and no matter how strong I tried to be on certain points, I was totally disregarded. So, could I have tried harder? I don’t know. Could I have done more? I don’t know.
Ryssdal: Let me explore for that for a minute, because, you know, you spent 15 years as CEO of the place, you were chairman of the executive committee, you have some pull and that has to be acknowledged. The question then is, where were you and the other members of the board of directors when the folks who were actually executive office holders at the company at the time, were doing these things that got Bear into so much trouble? Where was the adult supervision?
Greenberg: Well, in theory, it was in the hands of the CEO and the chief financial officer and the board of directors. I was chairman on the executive committee — that’s true. But don’t think everything came before the executive committee. In fact, quite a few things did not come before the executive committee. The two funds that got in trouble early on, which I’m sure you’re familiar with, neither of those funds came before the executive committee when they were started.
Ryssdal: Let’s remind folks what those funds were. These were funds that back in the spring and summer of 2007, actually were the first bellwethers of the financial crisis. They went broke.
Greenberg: Yes, that’s true. One went broke, and one didn’t quite go. But, in theory, you’re right. I think really, Kai, the big mistake was that Bear Stearns was highly leveraged, and we were under the impression we owned triple-A securities, because those triple-A securities, you know, weren’t triple-A. And in a very short period of time, they went down to 50 or 60-cents to the dollar.
Ryssdal: How does that happen — that people who’ve spent their lives in the securities industry don’t know that something that’s rated triple-A isn’t?
Greenberg: Well, when did they find that out? When did triple-A securities ever have a drop like they had two years ago?
Ryssdal: So, nobody could’ve seen this coming then, right?
Greenberg: Well, I’m not just saying nobody, because some people did. Let’s just say that the rating agencies had for years put labels on things, the labels seemed to be somewhat realistic. And then, of course, they weren’t.
Ryssdal: You point out a couple of times in this book that Bear Stearns sort of lost control of its own destiny. Is there something you and the executives of that company could have done that would’ve prevented what happened with JPMorgan?
Greenberg: No. We were lucky that JPMorgan wanted to buy our real estate and wanted to buy certain aspects of the business. We were very fortunate.
Ryssdal: Alan Greenberg, vice chairman at JPMorgan Chase. Now, he was for many years, the CEO and the chairman of the board at Bear Stearns. His new book is called “The Rise and Fall of Bear Stearns.” Mr. Greenberg, thanks so much for your time.
Greenberg: Kai, thank you for having me.