Legendary Bear Stearns CEO Ace Greenberg becomes the latest to declare the end of Wall Street and the investment banking business model.
“There’s no more Wall Street,” Greenberg, 81, said last night in an interview on Bloomberg’s “Money & Politics” television program. “That model just doesn’t work because it’s at the mercy of rumors.”
Blaming the rumor mill is a unique and interesting take. Investment banking deals require a great deal of secrecy from a large number of people, so there's not much room for rumor. Rumors were the friend, however, of short sellers in Lehman and Bear Stearns stocks, who were happy for the spreading "news" that those balance sheets might be in worse shape than people generally thought.
My take is that while rumors might have hastened the demise of Bear, they are an inconvenience to bankers, not a death sentence. It depends on your perspective.