Filed under: Bad news, Management, Bear Stearns Cos (BSC)
Barry Ritholtz has an interesting post about Bear Stearns (NYSE: BSC) over at his excellent macro-commentary blog, The Big Picture. In Who is to Blame for Bear Stearn’s Demise?, Barry notes the growing list of people and institutions that are being blamed for the fall of the great Bear. One group seems to be missing from the list though: Bear Stearns itself.
Those accused of destroying Bear Stearns include the Fed. If only Bernanke had raised interest rates, the housing bubble wouldn’t have popped and the credit markets wouldn’t have seized up and Bear could have avoided the fatal run on its reserves. The clients who made that run, including Jim Simons from Renaissance Technologies, are also having some fingers pointed at them. If only they hadn’t asked for their money back, all would be well. And of course, we can’t forget the short sellers, who profited nicely from the astonishing drop in Bear’s stock price.
For the most part, these rumors and accusations seem to be coming from current and former Bear employees. And so it’s not too surprising that Bear management has not been singled out for blame. But Ritholtz dismisses the finger-pointing, calling the various theories of Bear’s collapse “a steaming pile of organic, enzyme-free donkey fazoo.” After all, no one forced traders at Bear Stearns to play so hard in the mortgage-backed securities game. Ultimately, poor management and excess risk destroyed the fifth largest investment bank in the country, not some conspiracy of malevolent outside forces.
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