Before AIG, before Lehman Brothers, there was Bear Stearns. The investment bank was more than just the canary in the coal mine of the credit crisis; its failure in March 2008 was the beginning of the end of an era on Wall Street.
A year ago, Wall Street Journal reporter Kate Kelly chronicled Bear Stearns' demise in a three-part series that was a must-read in the financial world. From that series springs "Street Fighters," a tightly written book that zooms in on the three days leading to the fire sale of Bear Stearns to J.P. Morgan Chase & Co.
The title refers to Bear's reputation as brass-knuckle outsider compared with white-shoe rivals Morgan Stanley and Goldman Sachs. But by 2008, Bear's best days were behind it. Longtime CEO Jimmy Cayne had stepped aside after a damaging Journal article (by Kelly) depicted him as more interested in playing bridge and smoking pot than in running his company. His successor, Alan Schwartz, was a competent investment banker, but as the new CEO he failed to grasp the depth of Bear's problems until it was too late.
The book opens as most top Bear Stearns executives realize the firm is toast. Most of the next three days is spent trying to stave off a bankruptcy filing until the company can sell itself. But those machinations are only a framework from which to hang the book's bread and butter, character sketches of Cayne, Schwartz and other insiders.
Among them: beleaguered corporate treasurer Bob Upton, his hair turned white by a year of 16-hour workdays; division chief Paul Friedman, awakened to make a major decision an hour after taking an Ambien; J.P. Morgan chief Jamie Dimon, probably twice as shrewd as anyone else in the room; Tom Marano, the tattooed Grateful Dead fan who ran Bear's mortgage business and now is CEO of Residential Capital, which employs a few hundred people in Richfield.
Kelly also captures some telling human moments, such as when two Bear managers walk into Starbucks and see CEO Schwartz in line ahead of them, "softly crying."
But in other ways, "Street Fighters" falls short. Kelly skimps on fitting Bear into the bigger picture of the crisis that engulfed Wall Street, and an analysis of just why Bear failed is reserved for an epilogue. Readers wanting more on those fronts may be better served by William D. Cohan's more ambitious "House of Cards" (albeit at twice the length of "Street Fighters").
But in putting a human face on the demise of big, bad Bear, "Street Fighters" succeeds.
