Ex-Bear Stearns CEO: There's 'Not Much' I Would Have Done Differently Before Collapse

The former CEO of one of the Wall Street firms most synonymous with financial collapse says in retrospect that there's "not much" he would've done differently before his firm imploded in 2008.

"You can go back and say, should we have done some things differently leading up to the environment we got in?" Alan Schwartz, the CEO of Bear Stearns during the firm's meltdown in 2008, said in an interview with CNBC. "You know, you can always say that. Hindsight is 20/20."

The first of the large Wall Street firms to go under during the financial crisis, Bear Stearns ran out of cash in mid-March 2008 and was rescued from bankruptcy through a deal involving JPMorgan Chase and the Federal Reserve Board days later. The collapse of the company, one of the biggest underwriters of risky mortgage-backed securities, portended the major Wall Street meltdown that was to come a few short months later.

During the real estate boom, banks started giving out loans to borrowers who normally don’t qualify for them, and sold them to Wall Street firms. The firms in turn created complex securities from these mortgage loans, and sold them to investors.

When the housing market began to crumble and borrowers started defaulting on their loans, investors lost confidence in Bears' ability to uphold the copious agreements it had with other financial institutions, leading to a slew of withdrawals and executives' realization that they didn't have enough cash to continue operating. Stock portfolios also suffered a huge blow after the firm agreed to be bought for 93 percent less than the closing price on the Friday before the sale.

The fallout from the firm's meltdown not only shook Wall Street investors -- it also hit Bears' employees hard. Of the company's 14,000 employees, only 5,000 lasted through to the sale to JPMorgan, according to the Wall Street Journal.

Schwartz was at least somewhat apologetic for executives' actions during the collapse.

“Those of us who were responsible for the firm were supposed to keep it out of trouble, and we didn’t,” Schwartz said in the CNBC interview.

Comments

[PJfunnybunny]

09:34 PM on 05/10/2012

If the Obama Admin had any cred they would put him behind bars for misleading all of us that suffered because we believed his words on CNBC and bought the stock! The SEC should be ashamed of not holding him accountable.. Stock market is for the money makers only the little guy average joe has no protection..

[PJfunnybunny]

09:42 PM on 05/10/2012

I lost 65K I did not have believing that guy, wrecked my life.. He makes that in hour!

[scott456]

11:06 AM on 03/02/2012

shareholders should have sued him so he would be penniless. I'm sure his lifestyle hasn't suffered at all.

[Payd Troll]

08:35 AM on 03/02/2012

they should be a special prison for all the wall st thieves and force them to pay for it from their ill gotten gains

[DIgnified]

02:43 AM on 03/02/2012

No news here. He got away without repercussion. Why should he care to change anything? All he has left to console him over his job loss is the pile of ill-gotten gains.

[somewhatodd]

05:04 PM on 03/01/2012

in other words, "no remorse".

[Bizmark]

03:05 PM on 03/01/2012

The one area of the economy that had absolutely NO Regulation was the sub prime mortgage industry. When Fanny and Freddy cooked the books to show less exposure and subsequently left the mortgage purchase business to Wall Street, the bankers devised deceptive 'instruments designed to keep the flow of sales commissions coming, bundling AAA's w/ -BBB's rendering the bubble obvious to anyone willing to question the notion of an ever expanding housing market.

What is telling in all this is that a Wall Street insider named Lyle Bass spent 3 years warning his colleagues of the dangers sub prime under capitalized bundles being passed off as tripple A's. Sooner or later, he warned, the bubble will burst and prove his faith in his prediction he also told them how he was going to make a fortune when it happened.

Through his hedge fund he bought one of Wall Street last inventions: The Virtual CBO. The rest is our sad and avoidable history.

[reddog in del mar]

02:34 PM on 03/01/2012

get ready for wall street's third act - because the play has started.

the street is bundling foreclosed homes owned by the U.S. government and is selling them in bulk packages to private equity funds and institutional investors as rentals rather than for immediate resale to individual buyers. this puts these homes right back into the hands of the folks that incinerated homeowners, started the global the melt-down, and got to keep the cash they made from all the garbage trades, AND they are getting said properties for pennies on the dollar.

there's under 200,000 homes slated -- if this pilot program works, and this potentially can cascade to homes that have yet to be foreclosed upon.

you think you do not know who owns your mortgage? In the future, you may not know your landlord, and your rent check is cashed by an entity you can never reach to fix a leaky faucet!

get ready - this one is more criminal than the last. you may rent a home from the same equity fund who you lost your home to illegally and received $2,000 for the slight inconvenience of being displaced and loosing your life's savings -- beware they may be your new landlord, too.

only in america - the 1% gets a boost up from the Feds at a rock bottom price -

why aren't these homes sold to individuals for pennies on the dollar?

[Lochness71]

02:15 PM on 03/01/2012

So he is greedy and stupid.

[beerbagger]

01:58 PM on 03/01/2012

Mr. Schwartz and his ilk make punching crying screaming babies in the face seem not all that bad.

[Trustfunded1]

12:52 PM on 03/01/2012

He could have gone to jail if he had done anything different.

sarc

[blacksmithn]

12:27 PM on 03/01/2012

This is kind of woodenheadedness is why there should be a banker dangling from every lamp post.

[ema123]

12:31 PM on 03/01/2012

And why they got it to trouble, he is basically saying "look, I made millions during the boom pawning bad fraudulent AAA investments to unsuspecting investors and walked away a very wealthy man, would I do it again, he11 yeah"

[sammyscout]

12:16 PM on 03/01/2012

So they run corporations that are too big to fail, made bad decisions [code for dishonest] and now, probably are not greedy like they were before, surely not.

And with Citizens United, can bankroll their candidate with unlimited contributions stolen from the tax payers.

Do I see a bad cycle here

[BBackSoon]

12:13 PM on 03/01/2012

Hell, he still lives in a big house or 20, has whatever kind of toys he likes and is not in jail.

Why would he change anything?

[barbarianatthegate]

11:53 AM on 03/01/2012

If I had the same golden parachute that this leech had, I wouldn't have done much diferently, either. Why bother?

[Ordinary Citizen]

11:38 AM on 03/01/2012

"During the real estate boom, banks started giving out loans to borrowers who normally don’t qualify for them."...
they were affordable low interest loans that people DID qualify for that is how they got the people to sign on the dotted line...duh. It was not the consumer here....it was the first line to the scam program .... they were called "variable interest loans" with huge promises attached that the unsuspecting consumer would never question as a lie.

...and sold them to Wall Street firms.
Which added a couple numbers to the interest amount charged and therefore a higher payment due. "variable interest" loan...

The firms in turn created complex securities from these mortgage loans
And again added a couple numbers to the interest amount charged which brought even a higher payment to consumer.

and sold them to investors.
Which attached their interest amount.

consumers could no longer afford the payment, loss of house. Oh well banks got their money when they broke the mortgages up and sold them, really what do they care. No big deal that the people are out of their homes...whatever!

Now they are buying up the foreclosed homes for penny's on the dollar and will rent them back to people that lost their homes in the first scam.

Amazing scam on their fellow citizen...ya just got to love this country!