Except when I was hot-boxing it. You know how that goes, Mr. Chairman. You really need the area completely sealed off. I find using a towel helps. Anywhoooo….so, other than those times– always open! For example, one time a guy came in and wanted to know why my office smelled like pot, which I explained to him had nothing to do with me getting high at work, but rather the fact that I’d just gotten a new leather couch, and as everyone knows, new leather couches often reek of weed.
Testimony of James E. Cayne
Before the Financial Crisis Inquiry Commission
May 5, 2010
Chairman Angelides, Vice-Chairman Thomas, and Members of the Commission, my name is James E. Cayne. I was the CEO of Bear Stearns from 1993 until January 8, 2008, and I remained non-executive Chairman until the firm was acquired by JPMorgan Chase & Co. in June 2008. I appreciate the invitation to appear before you today.
Bear Stearns was a remarkable company and I am proud to have spent my career there. I joined the firm in 1969, when it was a partnership with about thirty partners, and I worked there for almost forty years. Even after it became a public company, a large part of the firm— about one-third—was owned by its employees. To align the long-term interests of employees and shareholders, a significant part of its senior employees’ compensation (typically around one-half or more for the most senior members of management) consisted of restricted stock units and stock options. Like many employees I rarely sold a share of the firm’s stock except as needed to pay my taxes.
Bear Stearns had a strong culture of risk management. The head of the firm’s risk management reported to the firm’s Executive Committee. My office door was always open to any employee who had concerns about violations of our risk or compliance policies, or any other inappropriate conduct.
Beginning in early 2007, the market for subprime mortgages and securities backed by those mortgages began to experience severe dislocations. Although Bear Stearns had limited involvement in the subprime sector, the subprime crisis resulted in losses in two hedge funds managed by Bear Stearns Asset Management, a wholly-owned subsidiary of Bear Stearns. Although we attempted to preserve the stronger of the two funds by extending $1.6 billion in secured financing to that fund, both funds ultimately failed.
I do not believe that the collapse of these funds was a significant cause of the later collapse of Bear Stearns itself. While Bear Stearns took some of the funds’ assets onto its balance sheet in connection with the funds’ bankruptcies, those assets represented less than one-half of one percent of the firm’s total assets.
Over the course of 2007, the market for subprime and, increasingly, other mortgages continued to decline. In view of Bear Stearns’
leading role in the mortgage industry, these developments gave rise to market uncertainty about the firm.We believed that this concern was unjustified and that the firm had ample capital and liquidity. Nevertheless, we worked aggressively to address the market’s concerns. During the fall of 2007, the firm raised an additional $2.5 billion in long term debt. We also entered into an agreement in principle for a joint venture with a major Chinese securities firm that would have increased Bear Stearns’ marketing strength in Asia.
As I mentioned, I stepped down as CEO in early January 2008, and was not involved in the day-to-day management of the firm following my departure. Nevertheless, I would like to offer my opinions about the reasons for Bear Stearns’ collapse.
Despite the efforts we made prior to 2007 to reduce our exposure to the subprime sector, the scale of our activities in other sectors of the mortgage market caused widespread concerns about Bear Stearns’ solvency. These concerns were unfounded. Our capital ratios and liquidity pool remained high by historical standards. Nevertheless, as a result of these rumors, during the week of March 10, 2008, brokerage customers withdrew assets and counterparties refused to roll over repo facilities. These events resulted in a dramatic loss of liquidity. The market’s loss of confidence, even though it was unjustified and irrational, became a self-fulfilling prophecy.
Subsequent events show that Bear Stearns’ collapse was not the result of any actions or decisions unique to Bear Stearns. Instead, it was due to overwhelming market forces that Bear Stearns, as the smallest of the independent investment banks, could not resist. Only a few months after Bear Stearns collapsed, the same market forces caused the collapse and near-collapse of much larger institutions, such as Lehman Brothers. The efforts we made to strengthen the firm were reasonable and prudent, although in hindsight they proved inadequate. Considering the severity and unprecedented nature of the turmoil in the market, I do not believe there were any reasonable steps we could have taken, short of selling the firm, to prevent the collapse that ultimately occurred.
I look forward to answering your questions.
time to roll up and light a nice big fatty.
it’s incredible how unattractive he is. really, astonishing.
“In March 2008, as Bear Stearns was on the verge of bankruptcy, Cayne played bridge at a tournament in Detroit.
….
On March 14, 2008, Charlie Gasparino of CNBC reported that the value of Cayne’s holdings in Bear Stearns had declined from $993 million to significantly less than $200 million in the wake of Bear Stearns liquidity crisis. Just days later, Bear Stearns came to agreement with competitor JP Morgan for a full buyout at only $2 share, roughly $236 million for the entire firm. At the time, Cayne had significant exposure to the company’s stock, with most of his net worth tied up in shares of the company. It is estimated that the value of Cayne’s holdings had dropped to less than $15 million as a result, effectively removing him from the list of the wealthiest individuals in the country.”
you dumb f*ck, were you high?
please let him light up, please let him light up.
“Bear Stearns had a strong culture of risk management.”
Of course we did.
-Bear Stearns Financial Products VP
@3 ya think??
Ahh, I love the DB live blogs. So much activity, and so much drinking as well.
Like many employees I rarely sold a share of the firm’s stock except as needed to pay my taxes.
Cayne:BSC :: Gundlach:TCW
Put him in the same cell as Farsad Hazid or whatever his name is.
@9 no. gundlach made tcw shit-tons of money, whereas cayne smoked it all.
Actually, that statement is true. On the BC bud, no comment.
On whether Jimmy uttered the F-bomb word more times in a 5 minute conversation than Ms. Levin or I do, again no comment.
@12 get funny before commenting again
Testimony of James E. Cayne
Before the Financial Crisis Inquiry Commission
May 5, 2010
Dudes it likes, um, whatever. So like we’re all hanging out and like some dude is like “we have a problem” and I’m all like ‘Dude!’ and he’s like ‘No Really, there’s an issue with mortgages or something’ and I’m all like “That’s probably in hick, rural areas” and then this other dude is like “Did you just say ‘Rural’?” and we all started laughing our asses off. It was so funny man and we were so baked and then….. wait, what are we talking about?
14 FTW
Attempts at farcical stoned, satirical ramblings are not, and never will be, the new killing it. Unless written by Bess Levin, which will never happen of course, because she is above such pitiful attempts at humor
he looks ashighasaneagle in that pic
@2 please check back with us when you are in your mid 70s so we can judge quite how hot you are
not jimmy (caner) cayne
Translations:
-my door was always open, but I was not in the office
-the shorts caused us to fail
-Jamie Dimon would have paid us $10 share had the Treasury acted like we were worth saving
-I never smoked a bone while I was at work, or during office hours
-I love geishas, those Japanese women know how to please
“…yes, it is true I am playing the joker in the new Batman movie”
-Jimmy C.
this is your brain. this is your brain levered 40 to 1. this is your brain on drugs levered 40 to 1.
I often ran into Cayne at the executive floor and he was just plain rude and unfriendly unlike Ace. (I used to take dump at the executive floor bathrooms as thier bathrooms were cleaner than the trading floor and thier pantry had free coffee)
@16…Shut the fuck up.
~Cheech Marin and Tommy Chong
@22 what did you want him to say? thanks for taking an unauthorized shit in my bathroom?
I would totally let him pound me in the ass with the lights on.
-Female Canadian oil trader
19 gets it
-JC
Kayne, do me a favor, for real: GO FUCK YOURSELF