Bear, which recorded $1.9 billion in subprime-related charges in 2007 (Cayne called the losses a "body blow of massive proportions") and booked its first quarterly loss ever during last year's fourth quarter, has been at the center of the mortgage mess ever since two of its hedge funds collapsed last sunner, causing $1.5 billion in investor losses. Subsequently, while his firm was trying to weather the biggest storm in its 84-year history, Cayne came under fire for his conspicous absences, including cruising out of town to compete in bridge tournaments and taking Fridays off to play a round of 18 near his summer home. Not to mention other alledged habits that came to light when the Wall Street Journal ran a piece on Cayne last November.
Taking over the Bear helm is Alan D. Schwartz, the former president of the bank who's been with Bear since 1976. Schwartz, 57, is much younger than Cayne, 73, and according to the New York Times, "While [Schwartz] may not have any direct experience with Bear’s giant bond business, his youth and ability to charm top corporate clients provide a stark contrast to Mr. Cayne, who travels infrequently and is not known to spend large amounts of time courting clients." Cayne will remain a nonexecutive chairman at Bear.
Yesterday, Bear Stearns CEO James E. Cayne resigned his post as head of the embattled investment bank, joining several other top executives at firms such as UBS, Citi and Merrill who've been forced to step down in the midst of the mortgage crisis.