Dec. 9 (Bloomberg) -- Alan ``Ace'' Greenberg, the former Bear Stearns Cos. chief executive officer 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 chose to stay when JPMorgan Chase & Co., the biggest U.S. bank by assets, agreed to buy Bear Stearns through a forced sale in March. The acquisition followed a bank run by clients that left the 85-year-old New York-based firm on the brink of bankruptcy eight months after two of its hedge funds collapsed. Those failures caused investors to doubt the value of any asset linked to mortgages, freezing the credit markets.

Wall Street has changed ``forever,'' Greenberg said. Lehman Brothers Holdings Inc., once the largest underwriter of mortgage- backed bonds, went bankrupt after Bear Stearns fell, and Merrill Lynch & Co., which runs the nation's biggest brokerage, sold itself to Charlotte, North Carolina-based Bank of America Corp. to avoid the same fate. Morgan Stanley and Goldman Sachs Group Inc., the two biggest U.S. securities firms, converted into banks to tap more stable financing from deposits as shares of the companies lost more than two-thirds of their value.

``Rumors can start and turn into a self-fulfilling prophecy,'' Greenberg, who became Bear Stearns's CEO in 1978, 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.

Writedowns, Stock Losses

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.

The U.S. Treasury agreed to rescue Citigroup Inc., whose $2 trillion in assets once made it the biggest U.S. bank, after the company's share price lost three-quarters of its value. Treasury Secretary Henry Paulson won approval from Congress to spend $700 billion to prop up the financial system and spur consumer lending as the economy sank into a recession.

President-elect Barack Obama is focusing his economic recovery strategy on making the biggest investment in the nation's infrastructure since President Dwight D. Eisenhower created the interstate highway system a half-century ago.

Possible Survivors

Greenberg, who led Bear Stearns until James ``Jimmy'' Cayne took the role in 1993, said firms that will survive the crisis include those that specialize in advisory work on mergers and acquisitions as demand for independent opinions grows. Cayne, 74, stepped down in May.

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.

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 08:22 EST