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By Jennifer Yousfi
Bear Stearns was one of the earliest casualties of the subprime crisis, when two of the firm's hedge funds ran into trouble due to widespread exposure to mortgage-backed securities in June of last year.
Bear Stearns stock suffered more than any of Wall Street's other firms, dropping 53% in 2007. The fourth-quarter loss of $854 million was the first in the esteemed firm's long history. Cayne and other executive committee members did not receive annual bonuses due to the firm's poor performance for the fiscal year.
"CEOs at other financial institutions who were less impacted than Bear Stearns by the subprime crisis have been forced out, yet Jimmy Cayne has managed to cling on and will even continue as chairman," Octavio Marenzi, chief executive officer at Boston-based financial services consulting firm Celent, told Bloomberg. "He is truly the Harry Houdini of the boardroom."
Cayne plans to stay on as Chairman. It is believed current President Alan Schwartz will be his successor, although Bear Stearns has yet to make a formal announcement.
"[Cayne's] maintaining the post of chairman is totally inappropriate and an indication that this company's board has no intention of placing the shareholder first," Dick Bove, an analyst with, told MarketWatch.
While some clearly feel Cayne continuing as chairman is a miracle, if not a mistake, the board seems determined to keep him around.
"Jimmy's been so engaged with the company for a long time, he and [his predecessor, Alan C. "Ace" Greenberg] have been the personification of the company," Bear Stearns board member Henry Bienen told Bloomberg. "Jimmy's still a huge shareholder. It's the board's view that Jimmy would stay very involved."
Cayne joins other CEOs who have stepped down in response to poor performance during recent months. Charles O. "Chuck" Prince III was ousted from Citigroup Inc. (C) in early November and E. Stanley "Stan" O'Neal, former chief executive of Merrill Lynch & Co. Inc. (MER), retired at the board's urging in late October.
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Bear Stearns' Cayne to step down as CEO, WSJ reports
Bear Stearns' CEO to step down: report