Michael P. Regan is a Bloomberg Gadfly columnist covering equities and financial services. He has covered stocks for Bloomberg News as a columnist and editor since 2007. He previously worked for the Associated Press.

Few reputations were dragged through the mud of the financial crisis more than that of Bear Stearns head Jimmy Cayne, whose love of playing bridge and golf while his firm was collapsing was as well documented as his love of smoking weed and $150 cigars.

Could it be possible that his reputation has even further to sink? Why, believe it or not, the answer seems to be yes.

 The National Archives recently released "approximately 250 cubic feet of paper records and 13 terabytes of electronic records" from the Financial Crisis Inquiry Commission in a treasure trove for historians and journalists looking to fill in gaps in our understanding of Wall Street's near-death experience. What better place to start than with Cayne? 

Cayne’s recollection of the crisis "has become cloudy," author William Cohan wrote in Vanity Fair last year, citing a person familiar with a deposition he gave in a lawsuit brought by a hedge fund that lost money when Bear Stearns collapsed. "Some say he is just being cagey; others say he is a little out of it."

The freshly released "memorandum for the record" of the interview with Cayne by commission members Tom Krebs and Donna Norman shows that his recollections and familiarity with the business appeared "cloudy" (to be generous) way back in April 2010, just two years after the firm collapsed.

What's particularly astounding is his professed lack of knowledge of Bear Stearns Asset Management, the subsidiary containing the two hedge funds that collapsed in 2007 and dragged the firm's reputation into a fatal tailspin.

For example, there's this exchange on the funds' investments:

Q: With respect to funding, would you agree that the HighGrade Fund and the Enhanced Leverage Fund held illiquid assets? 
A: I don’t think I’m qualified to answer that.

Or how much borrowed money they used:

Q: At the time were you told what the leverage in the funds were? 
A: No.

Or even how many funds the unit ran:

Q: Do you know how many hedge funds BSAM had in 2007? 
A: No. 
Q: Any idea?
A: A couple, I don't think it was 10, but I'm not sure.
Q: It's not something you would know?
A: I know it's small, but then I might have known. I would be guessing if I gave you an answer.

Another chance to answer those questions about assets and leverage:

Q: In June 2007, were you aware of what composed the hedge funds or know what they were exposed to?
A: Not at all.
Q: Any idea of approximate leverage?
A: No
Q: Financing?
A: No
Q: Any idea they were highly reliant on the overnight repo market?
A: No.
Q: Do you think you should have in hindsight?
A: No.

So was Cayne that clueless? Or just playing dumb? We may never know for sure, but we'll take him at his word that he just didn't have the answers. Cayne's defense of his ignorance was that the hedge funds were a small part of the company's revenue and they hadn't shown any red flags in the past. There were 30 divisions in the company, and it was a source of pride that he didn't have to micromanage them.  Before 2007, the interview shows, he only talked to asset-management head Richard Marin about once every three months, and he didn't have to report what was going on in the division. 

This flashback to the financial crisis is useful for more reasons than just nostalgia. For one thing, it shows how much has changed since then. Thanks to the Volcker Rule, Wall Street firms that converted to bank holding companies after the crisis obviously can't run hedge funds, let alone funds that are levered 35 times assets. Still, those who want to break up the big banks will surely note that if Cayne couldn't keep track of 30 business units, how can CEOs of much larger universal banks be trusted to manage risks in even more widely dispersed companies?  

What's most notable in this type of nostalgia is how, nine years after the first throes of the crisis, shares and valuations of most big financial firms are still well below their peaks before the meltdown.

Rocky Road to Recovery
Many financial stocks are still trading below their levels when Bear Stearns started having problems
Source: Bloomberg

If the market is a disciplinarian, it may have been out to lunch before the crisis, but it's been working overtime since. And one thing's for sure: It's hard to imagine a disciplinarian market ever allowing another Wall Street CEO quite like Jimmy Cayne. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Michael P. Regan in New York at

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Daniel Niemi at