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Jimmy Cayne: A Man of Very Few Words

Posted by Larry Doyle on May 5, 2010 2:05 PM |

Jimmy Cayne, Former CEO of Bear Stearns

I am currently watching the Financial Crisis Inquiry Commission’s questioning of former Bear Stearns executives Jimmy Cayne and Alan Schwartz. In their opening statements, both Cayne and Schwartz deflected their managerial responsibilities as reasons for the firm’s demise.

Although I have long held out Jimmy Cayne as an exceptionally arrogant and greedy individual, his current performance evokes a range of emotions on my part. On one hand, I see Cayne as somewhat disinterested. On the other hand, I actually feel a tad sympathetic for Jimmy Cayne as he comes across as a frail, almost broken man. His abbreviated answers connote a lack of full understanding and control of the issues.

I totally disagree with him regarding the question as to whether Bear’s compensation model drove the firm’s excess leverage. Cayne denied that the compensation model drove the firm. Believe me, having worked at Bear Stearns for 7 years, the Bear compensation model was the sole and primary factor driving the firm.

I do not see Schwartz and Cayne sharing any real pearls of wisdom here. To this point, the Commission has not hit them on the culture of the firm which drove this firm to its demise. Viewing Cayne’s performance today and knowing the manner in which he ran Bear Stearns, I strongly believe the Bear Stearns board should be held out to dry. A lack of governance on the part of the Bear board played a very real part in this firm’s demise. That fact has never been fully exposed.

One final comment. Cayne’s stilted delivery does add fuel to the fire to those who think he is or was a pothead. The story leaked in late 2007 and is touched upon in a New York magazine article, The ‘Journal’ Knows What Jimmy Cayne Did Last Summer (and It May Have Involved the Wacky Tabacky!):

Attendees say Mr. Cayne has sometimes smoked marijuana at the end of the day during bridge tournaments. He also has used pot in more private settings, according to people who say they witnessed him doing so or participated with him.

I do not expect to learn about any of this dope today, given Jimmy Cayne’s abbreviated responses.


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