As a rule, the business of business books is anything but good writing. But the Wall Street Journal ran an excerpt from a new book by one of its reporters, Kate Kelly’s Street Fighters: The Last 72 Hours of Bear Stearns, the Toughest Firm on Wall Street (Portfolio, 256 pp., $26.95), that had sprightlier writing than most in the category. And Tim Rutten quotes a telling paragraph from this hour-by-hour account of the last days of the Bear Stearns investment bank in his Los Angeles Times review:
“Regulators may never know what really happened [to cause Bear Stearns to collapse in 2008]. But one thing is clear: Once confidence in a company falls away on such a grand scale, it can never recover. Bear started that week with more than $18 billion in capital, its largest cash position ever. Three days later, negative headlines, a stock drop, lender reticence and big withdrawals from client accounts had cut those capital levels in half. Eight hours later, it was nearly dead.”
The first sentence of that paragraph, Rutten rightly notes, is chilling: “Regulators may never know what really happened.” He adds:
“ … this was a situation so threatening to the fabric and substance of global finance that Federal Reserve Chairman Ben Bernanke would subsequently insist that, absent government intervention to essentially force the deal with JPMorgan, Bear would have gone into bankruptcy, causing a ‘chaotic unwinding’ of investments in all the American markets.
“Yet regulators may never know what really happened.
“That’s the intolerable fact of public policy on which this whole mess turns, along with all the pain it set rippling through the nation’s human economy, the one where ordinary people struggle to pay the deceptive mortgages that backed all those derivatives and where women and men who’ve lost jobs as a consequence of this calamity now scratch to find new livings.
“There are timeless human failings to ponder anew in Kelly’s artful narrative journalism — ego, hubris, venality and folly, the whole sad crew. They, unfortunately, will always be with us, consequences of our fallen nature. What we need not tolerate is a federal regulatory structure that is blind to the operations of those who wheel and deal at the very center of the global economy and federal officials who are so uncertain of their aims and prerogatives that they fumble in the face of crisis.”