As investment bank Bear Stearns collapsed, and was sold to JPMorgan Chase for a scant $240 million, its chairman James Cayne played bridge at a tournament last week in Detroit over two critical days, like Nero fiddling away as Rome burned.
Cayne's decision to remain at the tournament as the company's CEO Alan Schwartz negotiated with JPMorgan Chase to sell Wall Street's fifth largest investment firm for $2 a share, 90 percent less than its value last week, has been criticized as indicative of a senior management team that was distinctly out of touch.
Thousands of the company's employees whose savings were wrapped up in Bear Stearns stock options may have been ruined overnight, and a new light has been focused on the company's executives' spectacular downfall and their own investments.
As for Bear Stearns' 14,000 employees, many will lose their jobs and all of them have seen the value of their stock options evaporate overnight.
An average Bear Stearns employee who had $200,000 in a retirement fund now has just $2,000.
" These were secretaries. They don't even live in Manhattan. They [are] commuting from New Jersey and Long Island and leading relatively modest lives and suddenly they've had major nest eggs wiped out," James Stewart, editor at large at Smart Money, said today ABC's "Good Morning America."
Fearing a cash shortage, real estate clients caused essentially a run on the bank, withdrawing $17 billion in two days last week. Facing the prospect of bankruptcy, Schwartz sold to JPMorgan for a song compared with its value of $20 billion just three months ago.
Executives, including Cayne and Schwartz, took substantial hits to their portfolios, losing many millions of dollars. None of the company's leaders, however, had compensation deals to cushion their untimely fall, said Paul Hodgson, a senior research associate at the Corporate Library.
"Will this affect Cayne?" asked Hodgson. "Absolutely, it will. He was exposed heavily to company stock, but he also had access to a diversity of investment vehicles with a range of shares in them rather than single stock. He is hurt, but by no means has his entire personal wealth been damaged."
Cayne still owns a 5 percent stake in the company. Before last week he was estimated to be worth about $1 billion. Cayne, 74, stepped down as CEO in January after 15 years and much of the blame for the collapse has been placed on him. He owns 5.6 million shares, which last month were valued at $80 a piece or $449 million. The JPMorgan Chase sale values those shares at just $11.2 million.
For most people $11 million is no small piece of change, but that figure represents a fraction of Cayne's total assets.
Searches of public records by ABC NEWS discovered Cayne owned properties in New York City, Chicago and several cities in California.
In 2002, Cayne reportedly paid over $8 million for an historic Manhattan townhouse he later gave to his daughter.
Schwartz also took a big hit. Schwartz, like Cayne, had spent his life at Bear and was a serious bridge player. He had earned a reputation for being a gambler, and after just three months at the company's helm, is tasked with overseeing its collapse.
"Ultimately, Schwartz and Cayne and all of Bear Stearns' employees are huge owners of stock," said Mark DeCambre, a senior writer at TheStreet.com. "A third of the company's stock is owned by employees. No one is coming out of this unscathed, but the guys at the top have much less to worry about."