Vanity Fair on the Collapse of Bear Stearns

In the July 3 Vanity Fair, Bryan Burrough investigated the collapse in-depth from Wall Street sources — and questioned whether it died of its own weight:

The fall of Bear Stearns wasn’t just another financial collapse.There has never been anything on Wall Street to compare to it: a “run”on a major investment bank, caused in large part not by a criminalindictment or some mammoth quarterly loss but by rumor and innuendothat, as best one can tell, had little basis in fact. Bear had enduredmore than its share of self-inflicted wounds in the previous year, butthere was no reason it had to die that week in March.

What happened? Was it death by natural causes, or was it, as somesuspect, murder? More than a few veteran Wall Streeters believe aninvestigation by the Securities and Exchange Commission will uncoverevidence that Bear was the victim of a gigantic “bear raid”—that is, amalicious attack brought by so-called short-sellers, the vultures ofWall Street, who make bets that a firm’s stock will go down.

Part of the blame may go to bloggers.  We live in a different age now, and bloggers and viral videos can change the world fundamentally from sunrise to sunset.  (Just ask Hillary and Barack.) 

Blogreaction to the VF article is, inter alia, here and here.  Also, the “deep capture” website was a bit ahead of the story, cites it, but questions the specific patient zero, Ken Griffin, named by VF.  Says dc’s Mark Mitchell, “It will be up to the SEC and DOJ to identify the true culprits, butperhaps they could start by interviewing the hedge fund managers who were short Bear Stearns.”  Quite critical blogreaction is also here and here.

Jeff and others will recall that Bryan Burrough coauthored one of the most fascinating books on Wall Street and RJR, Barbarians at the Gate (also a hilarious HBO movie worth renting, with screenplay by Larry Gelbart of M*A*S*H and Tootsie fame). 

[Alan Childress]