A Tale That’s Absolutely Unbearable

When it happened last year, the collapse of Bear Stearns was unthinkable: the nation's fifth-largest investment bank, gone in a flash. But now? All too familiar. In his new book, "House of Cards," former i-banker William D. Cohan recounts that fated week in March 2008, which began with shares of Bear Stearns trading at $70 and ended with JPMorgan Chase buying it up at $2.

THE IDEA:Cohan's autopsy uncovers all the symptoms of a walking disaster: arrogant leadership, an insane balance sheet and a business leveraged to the hilt on borrowed cash.

THE EVIDENCE:When the run on Bear began, board chairman Jimmy Cayne was playing bridge in Detroit and CEO Alan Schwartz was in Palm Beach. Cohan argues that neither fully grasped the firm's toxic debt, and the one guy who did, Warren Spector, had been fired. Bear was also leveraged 50 to 1, meaning they borrowed $50 for every $1 they had.

THE CONCLUSION: Bear had only itself to blame. Yes, a speculative run fueled by rumor drained it of nearly $20 billion in a week. But that's finance: it's a confidence game. Bear could have dodged disaster in a number of ways, and, in the end, it actually got a bit lucky. Taxpayers took on the nastiest $30 billion of its toxic assets, and thanks to a goof by JPMorgan's lawyers, the firm was able to negotiate a better buyout a week later, for $10 a share. Still, thousands of investors lost billions of savings and net worth.