Interview With Former Bear Stearns CEO and Chairman Alan "Ace" Greenberg

Bloomberg Television’s Margaret Brennan had an insightful interview with former Bear Stearns CEO and Chairman Alan "Ace" Greenberg.

The two spoke about a wide range of topics but most of the interview dealt with the collapse of Bear Stearns and its aftermath when the firm was acquired by JP Morgan Chase & Co. (NYSE: JPM).

Greenberg praised the efforts of both Ben Bernanke, Chairman of the Federal Reserve, and Timothy Geithner, Secretary of the Treasury, to keep the international financial system from imploding.

Greenberg said, "look we were heading right towards the toilet, I mean we were in trouble in this country and if we were in trouble, that means the world was in trouble. And I give full credit to the people that got us out of this. And one of the things that I really think was awful was when Bernanke was up for reappointment, some of the people who voted against him, didn’t just vote against him, they verbally vilified him; they were vicious in their attack on him over the press and through TV. And I wonder if any of them feel like apologizing now for what they said about him and the Secretary of the Treasury Geithner?”

He went on to say, “I just think these guys have done a great job and think now that we’re on the right track and it’s all behind us, that people, the severe critics at the time, which is a short time ago, should now say that maybe those guys did a pretty good job in Washington. Maybe they did save us from what looked like a horrendous depression or melt down or whatever. They did what had to be done."

When asked about what led to Bear Stearns collapse and the financial crisis, Greenberg said, "the fact that the people originating the mortgages were doing, were falsifying things, the applicants ability to pay and so forth, that's where it really all started but then of course, the rating agencies contributed and of course we contributed, we didn't do our homework like we should have... and the worse thing was we had excess leverage. Period."

One of Greenberg's more amusing anecdotes was when he told Brennan about how he kept traders from trying to hide trades that had gone bad. "We had 3 people who worked for us. We had Cy the Spy, one was called the ferret, and one was called, I think the weasel. And their job was to walk around without any notice, sit down with a trader and look at his book and query him. So constantly we were on guard against the one thing that could cause you into so much trouble, and that’s an employee burying trades, having something that went bad and not disclosing it, and of course it gets worse and he tries to cover up and then you have a loss of a billion dollars or in one case 7 billion dollars," Greenberg said.