Business Books: Bear Stearns fall gets play-by-play analysis

NEW YORK, May 13 - Starting with vaporizing cash, fleeing clients and tense public statements and ending just days later with a $2 bill taped to its New York headquarters, the collapse of Bear Stearns Cos was a blur of panic and confusion.

In "Street Fighters," (Portfolio, $25.95) Wall Street Journal reporter Kate Kelly brings clarity to those final days with a play-by-play commentary of the bank's fight against failure.

From interviews with the executives who grabbed cat naps on office furniture surrounded by pizza boxes and empty wine bottles, to email exchanges and conversations between regulators and potential bidders, Kelly walks readers through that long weekend in March, 2008.

During that period, Chairman Jimmy Cayne, who cut his work weeks short to head to the golf course by helicopter and played bridge while the bank was burning through credit lines, was the face of the bank.

Cayne was a poster boy for what were known inside Bear Stearns as the "PSDs" -- poor, smart workers with a desire to be rich -- who Alan "Ace" Greenberg, the bank's penny-pinching, philosophizing former chief executive, had a policy of hiring.

These workers -- so attached to their jobs at what they saw as a uniquely independent, aggressive firm -- were both the bank's principal asset and its inherent weakness, according to Kelly.

Another was Chief Executive Alan Schwartz -- named to the top job after the bank lost $6.90 a share in the fourth quarter of 2007. Schwartz, "like many Bear employees, was in denial about his company's travails," Kelly writes, and therefore missed opportunities to raise capital the bank needed.

Blinded by their belief in Bear Stearns, these executives failed to realize the scale of its problems and that investors and customers did not share their confidence in the bank.

"One thing is clear: Once confidence in a company falls away on such a grand scale, it can never recover," Kelly concludes.

By the end of the weekend, JPMorgan Chase & Co <JPM.N> had offered just $2 a share for Bear Stearns, which became the first investment bank to collapse in a crisis that also claimed Lehman Brothers and Merrill Lynch & Co Inc.

"Street Fighters" is an extension of a three-part article Kelly wrote for The Wall Street Journal based on interviews with and reported conversations between the exotic cast of characters at the top of Bear Stearns.

It follows "House of Cards" by former investment banker William Cohan and is likely not the last to try to explain Bear's rapid unraveling, with "The Sellout" by CNBC anchor Charlie Gasparino due to be published in October.