It was 2001 when I said to Jimmy Cayne, the chief executive, that I wanted to retire as chairman of Bear Stearns. My exact words were, “I want to quit on top.” And he said, “I don’t want you to.” Should I have left entirely? He felt it was very important that I stay. I was 73 years old, but I didn’t consider myself old. So I said, “Well, I’ll be chairman of the executive committee.”
A few years later, Bear Stearns was having problems. I did the best I could to voice my concern about what they were doing and got nowhere. Look, you do the best you can, and you can’t worry about it. I was chairman of the executive committee, but not everything came to the executive committee. There were areas I wasn’t even allowed to stick my nose in, certain fiefdoms.
I didn’t think Jimmy was going to turn into somebody you couldn’t talk to, or an absolute demagogue. Meetings were horrible. Whatever I said, Jimmy Cayne would say the opposite, no matter what it was. He had this problem. If I said, “Tomorrow’s Tuesday,” he’d say, “No, it’s Wednesday.” There was no way to handle it. If you say, “We shouldn’t buy our stock back, it’s stupid,” he says, “We’re going to buy our stock back.” I don’t know what his problem was, maybe it was jealousy. He resented that people said I’d built Bear Stearns. And I relinquished control. My relationship with Jimmy ended one or two years before the collapse.
The way he conducted himself during the crisis? Just horrible. He didn’t study the books, didn’t know what we owned, didn’t call people in and ask. I couldn’t, I didn’t have the power. Another disadvantage was I only owned 10,000 shares at that point. I even told Jimmy, “You ought to diversify.” Then he used to say, “The trouble with you is you don’t own enough stock in Bear Stearns.” And I said, “The trouble with you is you own too much. That’s all you do, watch the tape and see where it’s selling.” And then of course he really resented the fact I didn’t own any stock when it started getting in trouble.
And then it all went poof.
I’m thankful that JPMorgan Chase (JPM) gave me the opportunity to work here [as vice-chairman emeritus at asset management], and I’m very happy. There have been a lot of forks in the road, and when I look back, every fork in the road I took was right. It really was. — As told to Max Abelson