by Calculated Risk on 8/06/2007 12:18:00 AM

From the WSJ: How Bear Stearns Mess Cost Executive His Job

On Wednesday James Cayne, the 73-year-old chief executive of Bear Stearns Cos., summoned his top lieutenant to his smoky, dimly lit office in midtown Manhattan.
...
He told Mr. Spector he had lost confidence in him. "I think it's in the best interests of the firm for you to resign," Mr. Cayne told Mr. Spector ...

The article has some new details on the Bear Stearns hedge funds:

By mid-June, the enhanced-leverage fund had missed margin calls -- requests for additional cash and collateral -- from lenders including Merrill Lynch & Co. and J.P. Morgan Chase & Co. The lenders wanted to be made whole.

Some Wall Street executives were pressuring Bear Stearns to stop the bleeding. Initially, the firm's executive committee balked. ... On the afternoon of June 14, J.P. Morgan's investment banking co-chief, Steven Black, and his top risk officer had a tense phone call with Mr. Spector, in which the lender urged Bear Stearns to give the fund some emergency credit, participants in the call say.

Calling the J.P. Morgan executives "naïve," Mr. Spector said Bear Stearns was the resident expert in the mortgage business, recalls one participant, and that the lenders should back off.

Early that evening, J.P. Morgan sent an in-house lawyer to Bear Stearns's headquarters with an official default notice. But a Bear Stearns receptionist told the lawyer that the firm was closed for business, and that the documents couldn't be accepted, people familiar with the matter say.

The blow to Bear Stearns's reputation, however, caused the firm to reverse course. Late the following week, after hearing a presentation from Bear Stearns's in-house mortgage team suggesting that the older fund might still contain value, the firm's executive committee authorized a secured loan to the less-leveraged fund of up to $3.2 billion. The fund ended up borrowing $1.6 billion, which it didn't repay entirely, leaving Bear Stearns's loan officers to seize the collateral remaining in Mr. Cioffi's fund. Bear Stearns could lose much of the $1.3 billion the fund still owes it, public filings indicate.