In 1996, an investor named Henry de Kwiatkowski sued Bear Stearns for negligence and breach of fiduciary duty. De Kwiatkowski had made–and then lost–hundreds of millions of dollars by betting on the direction of the dollar, and he blamed his bankers for his reversals. The district court ruled in de Kwiatkowski’s favor, ultimately awarding him $164.5 million in damages. But Bear Stearns appealed–successfully–and in William D. Cohan’s engrossing account of the fall of Bear Stearns, “House of Cards,” the firm’s former chairman and C.E.O. Jimmy Cayne tells the story of what happened on the day of the hearing:
Their lead lawyer turned out to be about a 300-pound fag from Long Island . . . a really irritating guy who had cross-examined me and tried to kick the shit out of me in the lower court trial. Now when we walk into the courtroom for the appeal, they’re arguing another case and we have to wait until they’re finished. And I stopped this guy. I had to take a piss. I went into the bathroom to take a piss and came back and sat down. Then I see my blood enemy stand up and he’s going to the bathroom. So I wait till he passes and then I follow him in and it’s just he and I in the bathroom. And I said to him, “Today you’re going to get your ass kicked, big.” He ran out of the room. He thought I might have wanted to start it right there and then.
At the time Cayne said this, Bear Stearns had spectacularly collapsed. The eighty-five-year-old investment bank, with its shiny new billion-dollar headquarters and its storied history, was swallowed whole by J. P. Morgan Chase. Cayne himself had lost close to a billion dollars. His reputation–forty years in the making–was in ruins, especially when it came out that, during Bear’s final, critical months, he’d spent an inordinate amount of time on the golf course.