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November 14, 2007
Bear Stearns: We're Chumps
In spelunking through the exhibits in the State of Massachusetts' suit against Bear Stearns for its credit hedge fund misadventures, I came across this snippet in an email from managing director Matthew Tannin to fellow directors as they were mulling a Cerberus bailout deal late last May:
Two years ago Ralph [Cioffi] went to see Bill Gross and came back with the following "Gross" observation: when involved with a trade - look around the room and determine who the chump is -- and if the chump is not clear to you - assume it is you.
Well - as I set here thinking through the Cerberus plan that we will present to Cerberus, Warren, Rich Marin and you guys - it is easy for me to see that I am the chump.
Ouch.
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This is the same old looking for a sucker game that has been played throughout the ages on Wall Street. Every rookie trader gets brainwashed with this. I am surprised this is even news.