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Bear Stearns: May 2009

Bear Stearns

Carlyle Group To Pay $20 Million, Submit To Cuomo's "Code Of Conduct"

Moe Tkacik | May 14, 2009, 4:06PM

In what New York AG Andrew Cuomo is hailing as a "revolutionary" agreement, Carlyle Group agreed to pay a $20 million settlement to "resolve its involvement" in former New York state comptroller adviser Hank Morris's alleged scheme to collect bribes from hedge funds and private equity firms in exchange for state pension fund investments. As part of the deal Carlyle will agree to Cuomo's new code of conduct banning the use of "placement agents" like Morris, who allegedly collected $13 million in sham fees from Carlyle for steering $730 million in state pension fund investments to the firm.

Carlyle admitted no wrongdoing and announced it was suing Morris and the firm he worked for, Searle & Co., for $15 million. The code of conduct could indeed prove pretty revolutionary in the industry if Cuomo succeeds in making similar settlements with other money managers, which he said was his intention. Whether it marks a considerable change at Carlyle is another matter; after all, if you can name one politically-connected private equity firm it is probably the Carlyle Group.

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Andrew Cuomo, Bear Stearns, Carlyle Group, Hank Morris

Jimmy Cayne

Where There Is Pot Smoke, There Is Ex Bear Stearns CEO Jimmy Cayne

Moe Tkacik | May 12, 2009, 11:51AM

We tore through the first big Bear Stearns book this year, William Cohan's House of Cards, in hopes of some substantiation of reports that the bank's former CEO (and former billionaire; he's now a "mere eight figure-aire) Jimmy Cayne liked to smoke weed. But Cohan skipped the issue entirely, as he had in a Fortune interview with Cayne last year. We might say we read those 468 pages in vain, except that we are not convinced marijuana played a significant role in the financial crisis, especially since the Cayne depicted and quoted by Cohan sounds more like an angry drunk than a stoner. Here's an abridged version of his rant about then-New York Fed President Tim Geithner:

"The audacity of that prick in front of the American people announcing he was deciding whether or not a firm of this stature and this whatever was good enough to get a loan," he said. "Like he was the determining factor, and it's like a flea on his back, floating down underneath the Golden Gate Bridge, getting a hardon, saying, 'Raise the bridge.' This guy thinks he's got a big dick. He's got nothing, except maybe a boyfriend. I'm not a good enemy. I'm a very bad enemy.

But he is also a marijuana enthusiast, according to Street Fighters, the new book on Bear written by Kate Kelly (a "cunt...whose capability is zero" according to Cayne.)