Fortune magazine reports there's a 50-50 chance Alan Schwartz -- Bear Stearns' CEO at the time of collapse -- will be Goldman Sachs'
Why is it weird? After Bear Stearns belly flopped last March, several credible reports suggested Goldman might have -- legally or otherwise -- triggered the electronic run on the bank that ultimately killed Bear Stearns. As The Wall Street Journal reported last summer:
Alan Schwartz, who headed Bear Stearns Cos. when it collapsed in March, has pointedly asked Goldman Chief Executive Officer Lloyd Blankfein whether there was any truth to talk that in the days preceding Bear Stearns's fall, traders in Goldman's London office manipulated the struggling firm's stock, according to a person with knowledge of the conversation.
Fortune told a more direct story of how Goldman may have triggered panic at Bear Stearns, writing:
[B]anks such as Goldman had done a brisk business (for a handsome fee, of course) agreeing to stand in for institutions nervous, say, that Bear wouldn't be able to cough up its obligations on an interest rate swap. But on March 11 , Goldman told clients it would no longer step in for them on Bear derivatives deals … When word of the Goldman e-mail leaked out, the floodgates opened. Hedge funds and other clients, eventually running into the hundreds, began yanking their funds.
Yowzas. You'd assume Schwartz and Blankfein wouldn't be too fond of each other, right? I mean, Schwartz lost his job because Blankfein's company (apparently) exposed Bear's gaping holes and embarrassing ineptitude. Schwartz can't look like the embodiment of success in Blankfein's eyes, and Blankfein can't look like an inspirational boss in Schwartz's.
Now, I have nothing personal against Schwartz. I'm sure he's a fabulous deal-maker. He was CEO of Bear Stearns for all of eight weeks before the firm imploded, so it's hardly fair to cast all the blame on him. Two things, however, make me wonder:
- Why didn't Schwartz go to Bear's new owner, JPMorgan Chase
(NYSE:JPM)? A thick book of well-connected bankers was supposed to be one of the big benefits of buying Bear Stearns last year.
- Haven't we tried this before? Former Merrill Lynch CEO John Thain tried a subordinate role at Bank of America
(NYSE:BAC)last year and was fired before the deal even closed. Monster egos merging into new cultures rarely seems to equal success.
Then again, let's look on the bright side: If a former Wall Streeter with perhaps the most tarnished resume in the world can find a job, maybe there's hope yet for legions of unemployed bankers looking for work.