Dec. 9 (Bloomberg) -- Alan “Ace” Greenberg, the former Bear Stearns Cos. chief executive officer who is approaching his 61st year on Wall Street, said the investment-banking model he helped pioneer is defunct.

“There’s no more Wall Street,” Greenberg, 81, said last night in an interview on Bloomberg’s “Money & Politics” television program. “That model just doesn’t work because it’s at the mercy of rumors.”

Greenberg elected to stay when JPMorgan Chase & Co., the biggest U.S. bank, acquired Bear Stearns through a forced sale in March. The acquisition followed a run by clients and lenders that left New York-based Bear Stearns on the brink of bankruptcy. Market speculation helped cause customers to pull their money from Bear Stearns and Lehman Brothers Holdings Inc., and pushed down the stock prices, he said.

The entire make-up of Wall Street has changed “forever,” Greenberg said. This year has seen the demise of Bear Stearns and Lehman, Bank of America Corp.’s purchase of Merrill Lynch & Co., and the conversions of Morgan Stanley and Goldman Sachs Group Inc. into bank holding companies.

“Rumors can start and turn into a self-fulfilling prophesy,” Greenberg said during the interview in Washington. He said he’s “never seen anything close” to the current economic decline and turmoil in the financial markets.

Financial firms worldwide have taken $980 billion of writedowns, losses and credit provisions since the start of the crisis, according to data compiled by Bloomberg. More than 201,000 jobs have been cut across the industry and the U.S. benchmark Standard & Poor’s 500 Index has dropped 38 percent this year, the worst annual decline since 1937.

Survivors

Firms that specialize in advisory work on mergers and acquisitions are “going to stay in business” as demand for independent opinions grow, Greenberg said.

New York-based JPMorgan, which kept the Bear Stearns name for the brokers, offered Greenberg a payout equal to 40 percent of the commission revenue he generates and the title of vice chairman emeritus. He became Bear Stearns CEO in 1978 and ran the company until James “Jimmy” Cayne took the role in 1993.

Charities, which are struggling to raise money, will have to replace $65 million to $80 million in giving from Bear Stearns employees, according to Greenberg. All senior managing directors and higher were required to give 4 percent of their income to organizations, he said.

To contact the reporters on this story: Elizabeth Hester in New York at ehester@bloomberg.net; Peter Cook in Washington at pcook6@bloomberg.net.

Last Updated: December 9, 2008 03:58 EST