House Of Cards: A Tale of Hubris and Wretched Excess on Wall Street by William Cohan. Doubleday. 2009.


The collapse of Bear Stearns came as a huge shock to Wall Street. Now in retrospect, it looks like a story of self destruction. William Cohan’s House Of Cards chronicles how decades of a definite corporate culture pushed Bear Stearns into oblivion. Its past determined its future as it ran into the financial crisis. The history is one of dominant personalities—Cy Lewis, Ace Greenberg, Jimmy Cayne—rather than a systematic approach. The picture that emerges is a collection of bright, motivated, opportunistic entrepreneurs without professional top executives in charge, especially during the final period. William Cohan calls this the “silo mentality.” The firm didn’t have business plans, and was made of “smart, tough street fighters.” Few if any understood that “the seeds of destruction had been sown.” One former Bear Stearns executive is quoted: “there were no grown-ups minding the shop.”

Bear Trap: The Fall of Bear Stearns and the Panic of 2008 by Bill Bamber is a graphic insider’s account of Bear Stearns’ demise which gives a gripping feel of being there, and of the Wall Street trading world. Bamber’s explanation for the collapse was partly the firm’s culture: “We were mavericks, fighters, survivors ... we managed to convince ourselves there was no fight we couldn’t survive ... it was arrogance.” Another factor was that its people were “drawn to Bear because of the lack of structure, the free-and-loose attitude that prevailed.” This feeling of family and loyalty kept most from seeing Bear Stearns in a rational and objective view, kept them from selling their stock, and getting out in timely fashion.

Bear Trap and House of Cards should be carefully read by everyone doing an intelligent look at their career paths and choices. These books show the need to look deeply into the corporate culture, risk management commitment of top management, and not just at the reported profits.