After ripping through Too Big to Fail it seems natural to continue understanding the collapse of Bear Stearns with House of Cards: A Tale of Hubris and Wretched Excess on Wall Street to get a bit under the hood of how the collapse of Wall Street almost killed our economy. The book’s focus is the last two weeks of life at Bear Stearns.
Most would agree Bear Stearns was the “perfect storm” in hilighting whats wrong with Wall Street. Trusted executives who cannot lead their company or explain products they are selling.
Author William Cohan even points out as Bear Stearns was collapsing two executives were in Nashville playing in a bridge card game tournament.
I was rather amused that with their ‘tough guy’ reputation on Wall Street, in the end the executives at Bear Stearns, facing the closure of their firm were actually considering filing chapter 11 to force a major collapse of the Western financial marketplace.
Known as their “nuclear option” Bear Stearns actually considered triggering the collapse of the US economy because they were unable to secure their quickly falling stock price at an “acceptable” price during negotiations with the Federal Reserve and JPMorgan Chase in their final hours of operations. And in the end, many of those tough guys ended up crying at their desks.
Cohan also reveals how in the end Bear Stearns simply cooked the books, played with massive egos and was actually surprised when JPMorgan Chase did not actually help them out after working with The Fed to set up a 29 day transition with JPMorgan Chase. But after years of bad blood and pompous actions, in the end Bear Stearns got exactly what they deserved….they drove their firm into the ditch while looking the other way and “rewarding” executives with multi-million dollar retirement plans.
House of Cards and Too Big to Fail both make me think it may be a great time to have the Government get into the financial marketplace. If implemented correctly (that’s a big IF) a Government run investment bank, securities trading and brokerage could generate enough profit to stop taxing Americans. Think its crazy? Read how all those trusted financial “wizards” acted while driving Wall Street and the global economy off the cliff.
And you think the best way to repair the financial economy is to give them back the keys to drive the car?