It was a day many on The Street will never forget and in many ways, we probably shouldn’t. The events of March 17th 2008 will forever be a reminder to me that no one is too big, wealthy, established or smart to fail.
The night before, on March 16th, a Sunday, the details about the bailout/ acquisition had floored anyone who happened to catch the news. Bear Stearns was being sold to JPMorgan Chase for $2 a share along with $30 billion in financing for less-liquid assets from the Federal Reserve. These numbers and this level of government participation were absolutely staggering at the time. Little did we know that the Fall of Bear was a beginning, not a crescendo, to the crisis.
I work around the corner from the old Bear Stearns building, in fact, I watched them build it from my office window from when it was just a hole in the ground.
The following is a description of what it was like to watch it all go down that day.
On the morning of Monday the 17th, it was sunny and it also was St. Patrick’s Day. If you’ve ever been in midtown Manhattan on St. Patrick’s day, then you know what the sidewalks outside of our hundreds of Irish pubs and bars must have looked like. 5th Avenue is only 2 blocks over from the Bear building and starting around 9 that morning, one could hear the distant rolling thunder of the bass drums and the squeal of the bagpipes. The ultimate irony of that day was watching the parade dissipate from the 5th Avenue route and the stragglers traipse down Vanderbilt Ave, passing right in front of the Bear headquarters. Picture a sea of green-clad partiers stomping past the media trucks that were there to broadcast a de facto funeral.
Erin Burnett was set up with a CNBC camera crew at a makeshift desk on the sidewalk at the corner of Vanderbilt and 45th Street. If you think her eyes are hypnotic on TV, wait until you see them in person.
One third of the people on the street that day were drunken revellers and one third were gawkers like myself and the guys I work with, who went around the corner to check it out. The other third were Bear employees who were in a state of shock looking at the circus happening around them.
My friend and colleague JC Parets snapped these pictures that day.
A week or so later, we jokingly began to refer to the site as “The Ooooold Bear Stearns Building”. For example: “Let’s hit up Devon & Blakely for lunch, its over by the Ooooold Bear Stearns building.”
Soon after, JPMorgan Chase would end up raising its purchase price to $10 a share, almost out of pity; they got a sweetheart deal from the Feds anyway. The humiliation of Warren Spector, Alan Schwartz and Jimmy Cayne was complete by then, while unfortunately, the firm’s legendary Chairman Ace Greenberg had his heart broken that day. I know someone who spoke to him that week and his having to watch this unfold wass probably one of the saddest aspects to this story.
This account of that day was written from the perspective of a Wall Street professional who was there and watched the rise and fall of Bear Stearns from the outside. I had many friends at that company who toiled in fixed income, the legal department, brokerage, asset management and banking services and I lived both the triumph and the tragedy vicariously through these people over the last decade.
It was inconceivable to me that there would be a Wall Street world without the venerable Bear, but writing one year later, its become pretty tough to shock me. After Bear fell, Lehman, WaMu, Wachovia, Merrill Lynch, AIG, Fannie and Freddie weren’t far behind, all iconic enterprises that I never thought would melt away before my eyes.
The facade of infallibility of the big brokerage and investment houses of Wall Street has since been destroyed, perhaps permanently. March 17th of 2008 was the day the first cracks began to appear.
Photos Courtesy of Juan Carlos Parets