The mortgage mess has claimed another CEO from a major investment bank. The Wall Street Journal reports that embattled Bear Stearns CEO Jimmy Cayne will step down from his post as CEO of the Wall Street firm, but will retain his seat on the board. According to the WSJ report, Cayne is expected to be succeeded by the firm's president, Alan Schwartz, characterized by the newspaper as "an investment banker known for his deal-making savvy." Felix Salmon over at Portfolio.com muses on Cayne's undoing succinctly:
This time last year, Bear Stearns was trading at a hundred and seventy something dollars per share. Today, it closed at seventy something dollars per share, well below its book value of $84. That's all you need to know to understand why Jimmy Cayne is stepping down as CEO.
I'm personally going to miss the blaring headlines about Cayne's alleged penchant for the ganj at the end of each day. How many 74-year old CEOs do you know that manage to make news for their business decisions AND the pot they allegedly smoke while making them? All joking aside, many will undoubtedly spill ink on the difficult challenges ahead for Schwartz -- retaining top talent will be one of the biggest -- but even the WSJ notes that Bear Stearns has one very important thing going for it: a strong capital base. Holding more chips at the poker table, as Bear appears to be doing in this case, could put the firm in a better position than its competitors as it adjusts to an extended downturn in the mortgage cycle and the spectre of a possible recession this year. Disclosure: The author held no positions in BSC when this post was originally published.