New York: After 59 years, Alan C. Greenberg is still trading away at Bear Stearns Companies Inc., the troubled Wall Street bank that is about to disappear. Ask about his retirement plans, and he laughs. “I’m in the noon of my career!” Greenberg, who at 80 is almost as old as Bear, said during a recent interview in his spacious office near the trading floor.
Unlucky colleagues lost jobs and fortunes when the investment bank collapsed into the arms of JPMorgan Chase and Co. this year, and Greenberg, Bear's former chairman, said he felt terrible about it.
Still Around: Alan C. Greenberg, Bear Stearns’ former chairman, in his Manhattan office. After 59 years, he is still trading away at Bear Stearns, the troubled Wall Street bank that is about to disappear
But his sympathy has its limit when it comes to James E. Cayne, the man who wrested Bear from him and presided over its dying days. Told that Cayne, with whom he worked for four decades, had lost much of his net worth and was suffering personally, Greenberg’s eyes turned cold. “Oh, really? Goodness, that’s a shame,” he deadpanned.
In June, shareholders are expected to approve JPMorgan’s acquisition of Bear Stearns, and as that moment approaches, an air of resentment and unease is building within Bear. Employees talk of cycles of grief in elevators and give each other teary hugs in hallways as they confront the awful prospect of finding work in the worst Wall Street job market in decades.
As for Greenberg and Cayne, their sometimes tumultuous relationship has boiled over into an outright feud—stoked by Greenberg's claim that Cayne ignored his counsel last summer as the credit crisis hit Bear.
“Jimmy was not interested in my point of view,” Greenberg said. “He was a one-man show; he didn't listen to anybody. That is when the real break took place.”
Such comments have angered Cayne, who has told associates that Greenberg, a director of Bear, never voiced such concern.
Whatever the case, the two men’s fortunes have now sharply diverged. Greenberg, who cashed out the bulk of his Bear fortune through regular sales over the years, has just signed a lucrative agreement with JPMorgan to stay on as vice-chairman emeritus. He will be paid 40% of the trading commissions he generates. And he recently began work on his memoirs.
Cayne, by contrast, has become a public pinata—blamed by Bear employees, a presidential candidate and others for the firm’s untimely end. His ties with Bear will be formally severed in June.
Although he still holds the title of chairman, he spends his days in relative seclusion, seeing few outside of the tight circle of his family, his two assistants and his lawyers. He personally lost about $900 million (Rs3,663 crore) when Bear Stearns’ stock price collapsed.
Greenberg wonders about Cayne’s continued presence at Bear Stearns. “I don't understand why he comes in,” Greenberg said. “He is not employed here anymore.”
That view has infuriated Cayne, who is said to be wary of the broadside that Greenberg may fire in his book. Cayne recently asked his close friend and Bear’s lead director, Vincent Tese, to call Greenberg's lawyer and explain that his verbal agreement with the firm allows him the use of his office and two assistants. Greenberg, who sits on the board, said he had no knowledge of such an agreement.
Cayne declined to comment about his relationship with Greenberg.
It is a clash of wills between two aging Wall Street titans who once symbolized the quirky charm of Bear and today suggests a more nuanced truth. The demise of the firm they loved was not so much the fault of either man. Instead, it was a collective failure of the governing five-man executive committee that over the years became so fixated on increasing the firm’s book value—and expecting the stock price to follow—that it lost sight of the concentrated, under-hedged exposure to the home mortgage market that left Bear vulnerable.
While Cayne has always given Greenberg credit for his contributions to the firm, he has poked fun at his offbeat personality, including his nickname, Ace, which Cayne makes a point never to use. He has a standing order among some of his closer associates: Anyone who uses the name Ace in his presence owes Cayne $100.
The final straw for Cayne was Greenberg's decision to charge Cayne a commission of $77,000 for the sale of his six million shares of Bear stock, a rate far above the maximum $2,500 commission that employees pay for a single trade. Since Cayne was not an employee anymore, he did not deserve such a rate, Greenberg said. “If he doesn’t like it, he should do his future business elsewhere,” he added.
Compounding Cayne’s ire, say people who have spoken with him, is the question of why Greenberg, who served as chairman of Bear’s risk and executive committees during the period in which the firm’s exposure to subprime mortgages hit its peak, has himself escaped censure.
That Greenberg now claims that his warnings went unheeded has driven Cayne to further distraction, these people say. One member of the executive committee said that Greenberg, as a longtime director, had ample opportunity to voice concerns about Bear's vast exposure to subprime mortgages and its hedging strategies, which he did not do.
“He never said a word,” said this person, who declined to be identified because of the legal sensitivities in the matter.
Asked to specify what the advice was that Cayne ignored, Greenberg remained oblique. “You can read about it in my book,” he said.
For many at Bear, the spat appears unseemly. “Everyone has to share in the responsibility. It’s silly to play the blame game,” said Fares D. Noujaim, a vice-chairman at Bear. “Jimmy treated Bear like his family, he did what he believed was best for Bear.”
As Wall Street duets go, the Greenberg and Cayne show has been a complex marriage of exuberant highs, periods of grudging respect and finally resentment and rupture. The two men were ferociously ambitious strivers who escaped hardscrabble upbringings far from New York’s bright lights and shared a common brio, a love for bridge and, crucially, a deep reluctance to break ties with the firm that had become such a part of their public identities.
Greenberg, who became chief executive in 1978, was 66 years old in 1993, when Cayne upended him. (Greenberg remained chairman until 2001.) Cayne, who almost died last summer from a vicious bout of septic shock, was 73 when he finally stepped down under pressure in January.
The two former friends had their last sustained interaction in late 2007, when Greenberg threatened to leave Bear, claiming he was not getting the respect he deserved. The departure would have represented another public relations blow for the reeling firm, and Cayne was told by his board to do what he could to appease him.
Sitting down in Greenberg's office, Cayne made his appeal, mentioning in particular a recent speech he had given at a Bear dinner in which he saluted Greenberg’s accomplishments and legacy. “Alan”, Cayne said before walking out, “this is the opposite of disrespect, so don't tell me you are disrespected.”
Greenberg says he did contemplate leaving, in part because his views were not being heard and for another reason as well. “I was depressed. My dog was sick,” he said. "He had not been performing well in dog shows.”
Greenberg did stay and he now says he is “very happy” to be working for JPMorgan.
Cayne remains devastated by Bear's precipitous end, say people who know him, and is keeping a low profile.
“I walk around with a horrible, horrible heavy heart each day,” Cayne has told friends. “It’s a severity of pain that cannot be measured, because you can’t measure the pain of 14,000 families.”
He has turned down offers from advisory boards and hedge funds and is keeping to his schedule of moving into his suite in the Plaza Hotel as soon as it is ready. Bridge, as ever, is a solace, as are long weekends at his home on the New Jersey shore.
“He is dreaming; why should I blame him?” Greenberg said. “I don't need to—everyone can draw their own conclusions.” Asked if he still considered Cayne a friend, he holds a long silence before responding. “Oh, he is a dear friend.”
©2008/THE NEW YORK TIMES