As Bloomberg’s Yalman Onaran reports this afternoon, Jimmy Cayne, formerly head of extinct investment bank Bear Stearns, told members of the Financial Crisis Inquiry Commission today that the collapse of Bear was the result of the “self-fulfilling prophecy” of the market’s loss of confidence, a development that was “unjustified and irrational.”
Cayne’s prepared remarks are posted here.
The Financial Times’s Alan Rappeport blogs that when Cayne was asked about whether there were internal debates over Bear’s capital levels in 2007 and 2008, Cayne responded that wasn’t the issue, that Bear had sufficient capital, but that it would have taken more capital than the entire size of Bear Stearns because the bank was “under attack” and would have required enormous measures to stop the run on the bank.
Cayne is joined in testimony today by former Bear execs Paul Friedman, Sam Molinaro, Warren Spector, and Alan Schwartz.
Commenting on the purchase of Bear by JP Morgan Chase (JPM), Cayne said he thought the firm had done a very good job with the acquisition, referring to the tight bond between the two over the years. “JP knew us better than anyone on the Street,” said Cayne, citing numerous conversations with JP Morgan CEO Jamie Dimon.
Cayne will be followed this afternoon by former SEC chairman Christopher Cox, former chairman Bill Donaldson, former SEC inspector general H. David Kotz, and former SEC trading and markets head Erik Sirri.
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