- Gentlemen, start your drones: Judge’s ruling opens door for commercial use
- Soldier who hid, bragged about not saluting flag to be punished — in secret
- ‘Maverick’ of the seas: ‘Top Gun’ school for U.S. ship officers to launch
- Putin declares Sochi Paralympics open amid Ukrainian protest
- ‘In Jesus name, we pray’ sparks ire at Ohio council meeting
- Navy’s first laser weapon ready for prime time; drone killer to deploy this summer
- Billionaire backer: Rick Santorum ‘needs to be heard’ in 2016
- Obamacare fallout: 49 percent pessimistic; 45 percent ‘scared’
- DHS accused of holding U.S. citizen at airport, using emails to pry into her sex life
- Seattle socialist: Minimum-wage discussion skewed by ‘right-wing’ GAO analysis
Bear Stearns chief steps down
NEW YORK (AP) — Bear Stearns Cos. said yesterday that co-President and co-Chief Operating Officer Warren Spector has resigned after the meltdown of two hedge funds that invested in risky mortgage-backed securities.
Alan Schwartz, who had been Bear Stearns‘ other co-president and co-COO, will become the sole president effective immediately, and Samuel Molinaro Jr. will assume the role of chief operating officer in addition to his current duties as chief financial officer, the firm said yesterday. Jeffrey Mayer, co-head of the fixed-income division, will take Mr. Spector’s seat on Bear Stearns‘ executive committee, the firm said.
“In light of the recent events concerning [Bear Stearns Asset Management’s] High Grade and Enhanced Leverage funds, we have determined to make changes in our leadership structure,” Chairman and Chief Executive James Cayne said. “I have every confidence in this team to continue Bear Stearns‘ 84-year legacy of success and profitable growth.”
But the collapse of the two hedge funds in the asset-management unit that Mr. Spector oversaw put him and the firm under pressure. The funds filed for bankruptcy protection Tuesday, two weeks after the company told investors that one with assets of about $638 million was essentially worthless, and another worth about $925 million before taking on losses in March had lost more than 90 percent of its value.
Both funds were squeezed after Bear Stearns made wrong-way bets on the home mortgage market and was caught as loans to risky borrowers began to default. Bonds backed by home loans and similar investments have lost value because of rising homeowner defaults as the housing market enters its third year of decline.
As reports became public that Mr. Cayne had asked for Mr. Spector’s resignation, Standard & Poors said Friday that it was considering cutting Bear Stearns‘ credit rating because of the firm’s exposure to the distressed mortgage and corporate buyout markets.
A lower rating likely would make it more expensive for Bear Stearns to borrow money.
Separately, another ratings agency, Fitch Ratings, downgraded $46.4 million worth of Bear Stearns bonds backed by subprime mortgages, or home loans to people with spotty credit histories.
The news sent the Wall Street brokerage’s shares tumbling to their lowest price since November 2005. The shares fell $7.28 to close Friday at $108.35.
“I am leaving with nothing but the highest respect and regard for Bear Stearns and all the talented professionals with whom I have been privileged to work,” Mr. Spector said. “I intend to remain a significant shareholder and will follow the firm’s future success with great pride.”
Taxpayers must pay the freight for over-budget train projects
- Kim Jong-un calls for execution of 33 Christians
- Rand Paul wins 2014 CPAC straw poll, Ted Cruz finishes a distant second
- Bill Clinton cashes in on struggling nonprofit hospital
- Vietnam says it may have found door of missing Malaysian jet as intel look into stolen passports
- U.S. pilot scares off Iranians with 'Top Gun'-worthy stunt: 'You really ought to go home'
- Bill Clinton poses for photo with Bunny Ranch prostitutes
- High schooler suing parents for money shot down by judge
- Italy outraged over U.S. gun dealer's 'David' ad
- Why Malaysia Airlines jet might have disappeared?
- CPAC 2014 straw poll results
Pope Francis meets his 'mini-me'
Celebrity deaths in 2014
Winter storm hits states — again