Spencer Morgan examines the uniquely colorful and rapidly vanishing culture of Bear Stearns in a today's New York Observer. You know how it goes: scrappy, poor-smart and desperate-for-riches, flying coach, no paper-clips, buy your own pen, sit in a folding chair. "The Bear mentality was defined by being not like the other banks," an analyst trader tells Morgan. "They prided themselves on being working-class men, the outsiders, the outlaws of the banking world."
But Morgan also turns up some very important insights into the mind of Ralph Cioffi, the hedge fund manager who was recently indicted for his role in the collapse of two Bear Stearns hedge funds last summer. It turns out that maybe the guy was a little too good of a salesman.
More after the jump.
A guy who worked with him said the thing about Mr. Cioffi, which is symptomatic of the Bear culture, is that he was promoted from a salesman position to a money manager position. "I have no idea why he was put in that position," said the colleague. "He had no experience. He'd been very successful in sales. But those are two totally different jobs.
"So what does he do in this new position? He sells, sells, sells his fund on investors, and then leverages the investments, basically raising money very successfully."
But the kind of full-steam ahead enthusiasm, the sell-side mentality that made Cioffi a star, may have been his undoing, Morgan concludes.
"He was probably a believer, drinking the Kool-Aid, and thought this was a minor blip," said another former Bear associate who'd done his time and now works at a hedge fund.
No siree. Mr. Cioffi was no dummy. He had created the Kool-Aid. The Kool-Aid had made him a star. And once the mortgage market started to sour, he was stuck.
Bear Naked Tradies [New York Observer]