Lots of others in the business news media want to interview Alan Schwartz, the new head of Bear Stearns. We just want to tell him what to do. They can only report. We get to decide.
Look. Alan let us tell you a story. When Kruschev was forced out as Premier of the USSR, he sat down and wrote two letters to his successor. The outside of the first letter said "open this the first time you get into a situation that you can't get yourself out of.” Soon enough the new Premier got himself into a sticky situation. So, he opened the first letter from Kruschev and it said "Blame every thing on me.” So the new Premier did, and it worked like a charm and he was back up on his feet. Pretty soon though, he got himself into another mess and so he opened the second letter from Kruschev, it said "Sit down and write two letters".
So you see Alan, you're in that first golden period. Write down everything on your books that even possibly hints of nonperformance. Because right now, you can just blame everything on Jimmy Cayne. But if you don't take the write downs, and you miss your numbers later on... well then you'll need to sit down and write two letters.
Also, for Bear Stearns investors, you might want to take this advice into account. If the new boss has a clue about how to run things, we’re likely to see more write-downs and hedge fund collapses. Does anyone know if there are any more of these funds full-up with asset-backed securities hiding in the bathrooms at Bear? They don’t return our calls these days, so we’re not even bothering to call them.
--Everett Stuckey, DealBreaker correspondent.
Posted by jag, Jan 10, 2008 4:46PM
a) the CEO isn't an accountant, and b) the idea that you should overstate your losses during a bad year to make your succeeding years look better goes against just about every accounting rule you can imagine.