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yed. “He’ll say something negative if you shut him out. But if you talk to him, he’ll go positive,” one Bear executive told me.

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That night Schwartz, Molinaro, and others discussed what to do. The talks centered on whether Schwartz should go public in an interview with CNBC. “We debated putting Alan on the air a long time,” says one board member. “Yes, it might draw attention to the rumors. But it would definitely answer the questions. Our view was: we had to get him out.”

Schwartz, though, wanted some assurances first. From experience, he knew he faced a risk in picking the wrong CNBC correspondent for the interview. All the network’s talent—Gasparino, Maria Bartiromo, Faber, Larry Kudlow—had requested the interview, and whoever didn’t get it, Schwartz feared, might retaliate on the air. “Each of these correspondents has his own producer, and they all seem to hate each other,” one Bear executive told me. “If you choose Faber, you know Bartiromo will bash you the next day.” Schwartz directed Russell Sherman to identify the CNBC executive who supervised the correspondents, explain the situation, and ask that the correspondents who didn’t get the interview refrain from attacks. Sherman, however, couldn’t identify a single CNBC executive who seemed to have control over the correspondents. “Everyone on Wall Street knows the joke,” says another Bear executive involved in the discussions. “At CNBC, there is simply no adult supervision.”

In the end they chose the safest of the lot, Faber. Wednesday morning, all across Manhattan, Wall Street traders crowded around their monitors to see what Schwartz had to say. More than a few shook their heads that the Bear C.E.O. was not in his office, grappling with the emerging crisis, but in, of all places, Palm Beach! As a senior executive of one competing firm put it, “To come on CNBC from Palm Beach and, you know, tell everyone everything was going to be O.K., they had to be crazy.” (Schwartz was worried that an abrupt departure from his conference might raise even more questions.)

Faber’s first question was a bombshell. He told Schwartz he had direct knowledge of a trader—a single trader—whose credit department had held up a trade with Bear Stearns, citing concerns about its health. At Bear, many executives gasped. It was a killer statement: Faber was saying, in essence, that Bear’s status as a trader, the basis of its business, was in question. Schwartz answered as best he could, saying everything was fine; only later did Faber say on-air the trade in question had finally gone through. But the damage had been done.

“You knew right at that moment that Bear Stearns was dead, right at the moment he asked that question,” a Wall Street trader of 40 years told me. “Once you raise that idea, that the firm can’t follow through on a trade, it’s over. Faber killed him. He just killed him.”

At Bear Stearns, however, the sentiment on the sixth floor was that Schwartz had done a good job. The interview did nothing, however, to stop the rumors. When Schwartz returned to his office that afternoon, he tried calling customers, but nothing he did could stem the tide. By the end of the trading day, the first repo lenders had warned Molinaro they would not renew their loans the next morning.

“The tone of Wednesday afternoon was not positive—three days of rumors were starting to take their toll,” says a senior Bear executive. Mostly because of hedge-fund withdrawals, the firm’s reserves had shrunk to less than $15 billion. That evening, meeting in Molinaro’s conference room, the chief financial officer told Schwartz they could probably replace those reserves the following day. If the repo lenders began backing out, though, they were in serious trouble. Schwartz had a long-standing emergency plan in place, involving the sale of Bear assets, and for the first time Molinaro pulled it out and began studying it in earnest. Schwartz, meanwhile, got on the phone to Gary Parr at Lazard. They agreed to meet the next day. Late that night a Bear lawyer telephoned Tim Geithner, president of the New York Federal Reserve. He briefed him on Bear’s plight and urged him to have the Fed accelerate its plan to provide liquidity to the market.

The next morning, on his drive in from Connecticut, Molinaro began calling the repo and finance desks to check the tone of their early calls. The Journal had a story suggesting that any number of Bear’s lenders, including the all-important repo lenders, were growing nervous. Still, those first calls went as well as could be hoped. Other firms were still trading with Bear. Few of the repo lenders were talking about refusing to roll over their daily loans. “Thursday morning, things looked good,” says one Bear executive.

Then, just as they had the day before, the rumors began to multiply—and with them the withdrawals. By midafternoon the dam was breaking. One by one, repo lenders began to jump ship. As word spread of the withdrawals, still more repo lenders turned tail. The hedge-fund cash was almost all gone. “A lot of people were pulling out,” one Bear executive remembers. “The nail in the coffin was the repo capacity.”

Molinaro and Robert Upton, Bear’s treasurer, ended the day toting up the withdrawals. By five, Molinaro could see his worst fears had been realized. He picked up the phone and called Schwartz in his 42nd-floor office. “You need to get down here,” he said.

The numbers, scribbled out on a yellow legal pad, told the story. Standing in Molinaro’s conference room, Schwartz listened as Robert Upton guided them through the wreckage. A full $30 billion or so of repo loans would not be rolled over the next morning. They might be able to replace maybe half that in the next day’s market, but that would still leave Bear $15 billion short of what it needed to make it through the day. By seven it was obvious they had only two options: an emergency cash infusion or a bankruptcy filing the next day. The one thing everyone agreed upon was the need for secrecy. “If word gets out, it might be the end,” one participant recalls saying.

Schwartz was stricken. He had genuinely thought they would make it. By early evening, realizing that Bear’s life expectancy might now be numbered not in days but hours, he hit the phones. The regulators—the S.E.C., Treasury, the Fed—had been watching the situation all day and were waiting when he called to brief them. Gary Parr, the Lazard banker, had already touched base with J. P. Morgan’s C.E.O., Jamie Dimon, that afternoon, letting him know where Bear stood. J. P. Morgan was the obvious candidate for overnight cash. The two firms had long-standing ties. Their headquarters faced each other across 47th Street.

That day was Dimon’s 52nd birthday, and he was celebrating with a quiet family dinner at Avra, a Greek restaurant on East 48th Street. He was irked when his private cell phone rang; it was to be used only in emergencies. On the line was Parr, who put Schwartz on as Dimon stepped outside onto the sidewalk. Schwartz quickly explained the depth of Bear’s plight and said, “We really need help.” Still irked, Dimon said, “How much?”

“As much as 30 billion,” Schwartz said.

“Alan, I can’t do that,” Dimon said. “It’s too much.”

“Well, could you guys buy us overnight?”

“I can’t—that’s impossible,” Dimon replied. “There’s no time to do the homework. We don’t know the issues. I’ve got a board.”

The people he should call, Dimon said, were at the Fed and the Treasury—the only place Bear could get $30 billion overnight. Still, Dimon promised to see what he could do to help. He hung up and dialed Tim Geithner at the New York Fed downtown. Twenty-first-century Wall Street is a highly interconnected world, with just about everyone lending billions of dollars to everyone else, and Geithner worried that Bear’s collapse might trigger a domino effect, taking down scores of other firms around the world; he urged Dimon in the strongest terms to think about somehow helping Bear. “Tim, look, we can’t do it alone,” Dimon said. “Just do something to get them to the weekend. Then you’ll have some time.”

Dimon hung up, reluctantly realizing Morgan was in this, like it or not. He knew everyone involved would push Morgan to consider buying Bear, but while there were certain of its businesses he coveted—prime brokerage, energy, correspondent banking—he wasn’t thrilled at the prospect of taking aboard its massive mortgage-related problems. Still, in short order, he dispatched a credit team of a half-dozen traders to Bear to begin looking at its books. Then he realized he had a problem.

It was Steve Black, his investment-banking chief. The Morgan man who probably knew Bear best, Black was on a family vacation on the Caribbean island of Anguilla. That evening, in fact, Black was looking forward to three days of peace and quiet with his wife, Debbie. At her insistence, he had left his cell phone at the hotel when they went for a late dinner at a beachside restaurant. Midway through their meal, Black looked up and saw a man marching toward the table.

“Oh, shit,” Black said under his breath.

“Are you Mr. Black?” the man asked. When Black nodded, the man said, “I have an emergency call from your hotel.”

Black told the hotel to have Dimon call him at the restaurant. He was waiting in its bustling kitchen when the phone rang. “It’s for me,” he told a cook. By nine Black was back in his hotel, orchestrating the teams beginning to study Bear’s situation. A Morgan jet would arrive in the morning to ferry him back to New York.

The first team of Morgan executives reached Bear’s sixth-floor executive suite around 11 that night. It didn’t take long for them to realize the danger in what they were being asked to do. If Dimon lent Bear $15 billion or so and the firm imploded the next day, they could lose it all. A little after midnight Dimon told Schwartz in a phone call, “We’ve got to get the Fed in on this.”

Downtown, Tim Geithner was waiting when Dimon telephoned. Any bailout, Dimon reiterated, was too big, too risky, for Morgan to handle alone. Both men knew that meant only one thing: somehow Bear had to be given access to the Fed “window,” that is, the spigot of cash that was available to the nation’s commercial banks, but not its investment banks. The only way for the Fed to help, to give Bear access to the “window,” was to lend Morgan the money, allowing the bank to act as a bridge across which the Fed cash could stream into Bear’s vaults.

Geithner, quickly grasping the wisdom of the move, got on the phone with Washington, going through the details with the Fed’s chairman, Ben Bernanke, and the Treasury secretary, Hank Paulson, and his counterparts at the S.E.C. If they could just get Bear through the next day, perhaps a bigger and better deal could be forged over the weekend. By two a.m. teams from the Fed and the S.E.C. had joined the Morgan bankers at Bear, poring over the numbers. In Molinaro’s conference room, Schwartz and Molinaro paced, occasionally taking bites of cold pizza; their fate, they now realized, was largely out of their hands.

By four a.m. the outlines of a deal were taking shape. Morgan would give Bear a credit line; the money would come from the Fed. It took three more hours for the details to be pounded out. At the last minute Morgan’s general counsel, Stephen Cutler, inserted a line into the press release stating the credit line would be good for up to 28 days.

At Bear, Schwartz and Molinaro allowed themselves a few nervous smiles. They were saved—for 28 days. “We all thought this was a huge win,” remembers one Bear executive. “We were all pretty pleased, thinking we had averted our potential deaths.”

They wouldn’t be so sanguine for long.

When the markets opened Friday morning, traders greeted the news from Bear with surprise but not, at least initially, with panic. For the first hour or so of trading, the stock remained where it had been the day before, in the low 60s. In Anguilla, Steve Black furrowed his brow. “This is nuts,” he remarked to his wife as they headed for the airport. “No one understands what happened here. This stock should be half that.” By the time the Blacks arrived at the airport, it was.

By four o’clock the firm’s capital reserves, which had been $18 billion that Monday, had dwindled to almost nothing. “The balances leaving was a flood,” remembers one Bear executive. “By Friday afternoon we couldn’t even keep track of the money going out. Friday afternoon, I have to say, caught everyone by surprise. Because Friday morning we thought we had bought some ‘stop, look, and listen’ time.”

Gary Parr, meanwhile, was already on the phones, canvassing every prospective rescuer he could think of. Just about anything was on the table: a merger, a sale of prime brokerage or other valuable assets, even an outright sale of Bear itself. The only way to stop the run, everyone knew, was to find what Parr kept calling a “validating investor”—a big name, hopefully with big money, who would send a message that Bear was still solid. Warren Buffett, with his unmatched reputation for identifying value, was the ideal solution. “If Buffett had put in a hundred dollars, that would’ve been enough,” says one person involved that day. “That would have sent the message.” But there was no rush, at least not at first.

Around six Schwartz slipped into the back of a black town car for the drive home to Greenwich. Somehow Bear was still alive, if barely. Thanks to the Morgan credit line, they could probably open on Monday. Now he had 28 days—28 days to raise new capital, find a merger partner, or sell Bear outright. It wouldn’t be easy, he knew, but it was doable. Then, as the car cruised northeast, Schwartz’s phone rang. It was Tim Geithner of the Fed, with the Treasury secretary, Hank Paulson. Paulson came right to the point. “You’ll recall I told you when we cut this facility [that] your fate was no longer in your hands,” he told Schwartz. “Well, we don’t plan on being here on Sunday night like we were last night. You’ve got the weekend to do a deal with J. P. Morgan or anyone else you can find. But if you’re not done by Monday, we’re pulling the plug.” And, like th hWww Easymakingmoneysecret Tag Entrepreneurs Easy Making Money Secret A very readable article on Bear Stearn's demise.未名空间(mitbbs.com) - 海外华人第一门户r h Making Easy Making Money Secret Making Easy Making Money Secret lWww Easymakingmoneysecret Tag Entrepreneurs Easy Making Money Secret A very readable article on Bear Stearn's demise.未名空间(mitbbs.com) - 海外华人第一门户c t Program Secret Easy Making Money Secret