The St. Patrick’s Day Parade is the very best of all the NYC parades in terms of the sheer festivity surrounding it. Everyone’s Irish on March 17th in New York City. So it was an interesting juxtaposition nine years ago to watch merrymakers and departing parade participants drift past the front entrance of Bear Sterns, which had just received its humiliating death sentence the night before.
On Sunday evening, March 16th 2008, the details began to surface about how the crashing meteor that was once a top American investment bank was going to be dealt with. JPMorgan had gotten the go ahead from federal banking officials to acquire the firm for two bucks a share, or roughly a 99% discount to its share price just a year before. The government, in selling the deal to JPMorgan CEO Jamie Dimon, had agreed to backstop a lot of the outstanding liabilities that had cratered the firm. Eventually the price would be raised to $10 per share from 2, but the psychological damage had already been done. Bear was finished.
The next day, St. Patrick’s Day, my friends and I walked around the corner from our offices at 230 Park Avenue (formerly the Helmsley Building) to see what was going on at Bear HQ. Bear’s building sat at the corner of Vanderbilt and 47th Street, abutting Grand Central Station, between Madison and Park Avenues. I had watched the firm’s global headquarters be built from scratch and open as a state of the art skyscraper in 2002. The firm didn’t last a full six years from the ribbon-cutting.
We could hear the bagpipes and drums echo through the canyons of Midtown as we approached that afternoon. Men in kilts, policemen in full dress uniforms, baton twirlers and drunken revelers in a sea of green filled the streets. Erin Burnett and her CNBC camera crew had set up shop outside the front doors of the Bear building and relayed details about the $236 million rescue of the firm as they emerged.
I remember my friend JC Parets saying, “Look guys, it’s the ooooooold Bear Sterns building,” as though he were remarking upon a landmark that had been abandoned a hundred years ago. I can’t remember why it was so funny, but we laughed.
Lots of the Bear people I knew stayed on at JPMorgan but many of them were superfluous and doing a job that Dimon already had people doing, from fixed income to mortgage banking to asset management. Some found gigs on The Street but some didn’t. The only sure thing after the collapse was that compliance people were going to be in high demand. Traders and product people didn’t have quite the same job security, given the chastening that was about to happen at the surviving banks.
A lot of people on The Street had assumed that the collapse of Bear Sterns could have represented a bottom. “This has to be the worst it gets, right? The Fed and Treasury aren’t going to let this happen again.” That was a reasonable assumption to make, given how unprecedented it was to see the housing market fall nationally outside of an actual recession and the crash of one of the largest financial institutions in the world.
Little did we know, as our little group of stockbrokers stood there gawking, that what we were witnessing was just the first inning in something substantially larger and more consequential. It would change all of our lives and change the world.
And it was just getting started.