Bear Sterns In U. C. Cohan's The House Of Cards

House of Cards describes in particular the complicated series of events that led to the downfall of Bear Sterns in March 2008. Its actual appeal, however, deduces from its complete and careful analysis of the history of the firm since its origination as an upstart brokerage firm in 1923 and a gripping account of the demise of Bear Sterns in 2007. This failure prognosticated a lot of issues that would eventually stultify the firm, and the author puts forward that its deviation from various historical operating practices led to its ultimate sale to JPMorgan Chase at $10 per share, down from over $170 just a year earlier.

Cohan, also the author of “The Last Tycoons,” a 2007 book about Lazard Frères & Company, gives us in this book a shuddery, almost microscopic account of the 10, vertigo inducing days that disclosed Bear Stearns to be a fragile house of cards in a perfect storm.

Why I choose this book?
Wall Street fascinates me and the global credit crisis events were the most perilous too our economy and well-being since the Great Depression so I wanted to get a deeper understanding of the events and people involved.

In the first part of the book “Ten Days in March”, the author describes Bear Sterns as a self-governing independent entity in the last few days of. It is a fairly riveting account of executives entangled in a crisis of confidence that overtook world financial market and their participants

The second part, “Why It Happened: Eighty-Five Years,” explains the origins of the firm and its founding and operating principles, and it sets the basics for why several deviations from these founding principles eventually led the firm astray.

Ultimately, the last part of the book, “The End of the Second Gilded Age,” gives the ...

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... but was reinforced as the major takeaway from the book.

 Acting arrogant and going against the status quo can come back to bite you big time. Bear refused to participate in the bailout of Long Term Capital Management when the rest of Wall Street participated. This along with their arrogant attitude labeled them as outsiders which helped them thrive up to the time when they needed help. That help was nowhere to be found and they were not invited to the big decisions because they had neglected politics a game that Goldman Sachs and others had perfected.

 Bear Stearns went from a market value of billions to being worth $2 a share in a few weeks. They would have been acquired for that very price if a legal screw up did not force their acquirers to up their ante to $10 per share. The mighty can fall quick but lawyers will make money either way even if they screw up.