Thursday, November 01, 2007

Where's The Accountability?

Mayor Bloomberg always says how business holds people accountable for their actions and we need to add some of that accountability to public education.

I wonder if he means this kind of accountability?

A crisis at Bear Stearns Cos. this summer came to a head in July. Two Bear hedge funds were hemorrhaging value. Investors were clamoring to get their money back. Lenders to the funds were demanding more collateral. Eventually, both funds collapsed.

During 10 critical days of this crisis -- one of the worst in the securities firm's 84-year history -- Bear's chief executive wasn't near his Wall Street office. James Cayne was playing in a bridge tournament in Nashville, Tenn., without a cellphone or an email device. In one closely watched competition, his team placed in the top third.

As Bear's fund meltdown was helping spark this year's mortgage-market and credit convulsions, Mr. Cayne at times missed key events. At a tense August conference call with investors, he left after a few opening words and listeners didn't know when he returned. In summer weeks, he typically left the office on Thursday afternoon and spent Friday at his New Jersey golf club, out of touch for stretches, according to associates and golf records. In the critical month of July, he spent 10 of the 21 workdays out of the office, either at the bridge event or golfing, according to golf, bridge and hotel records.

Mr. Cayne evidently didn't court business on the links, as some CEOs do. "The golf course for him was an escape," says John Angelo, a hedge-fund client and frequent golf partner. Another golf partner, talk-show host Maury Povich, says: "Believe it or not, many words are not exchanged about business." During the bridge event, at a time when Bear's executive committee in New York was meeting almost daily, Mr. Cayne took part by phone, then played bridge most of the afternoon.


Attendees say Mr. Cayne has sometimes smoked marijuana at the end of the day during bridge tournaments. He also has used pot in more private settings, according to people who say they witnessed him doing so or participated with him.

After a day of bridge at a Doubletree hotel in Memphis, in 2004, Mr. Cayne invited a fellow player and a woman to smoke pot with him, according to someone who was there, and led the two to a lobby men's room where he intended to light up. The other player declined, says the person who was there, but the woman followed Mr. Cayne inside and shared a joint, to the amusement of a passerby.

And of course when it came time to hold somebody accountable for the hedge fund melt-downs, it wasn't Jimmy Cayne who took the fall.

Oh, no - other guys got fired while Jimmy Cayne played bridge and golf and got high.

Heckuva job, Caynie!

Makes the Bush administration guys seem professional.

POSTSCRIPT: Bear Sterns co-president Warren Spector took the fall for the hedge fund. meltdown.

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