House of Cards (39 page)

One day, during their morning drive downtown, Greenberg told Cayne a story about his personal life that Cayne never forgot. At that time, Greenberg was between marriages—he would marry Kathryn Olson, a lawyer, in 1987—and had been dating regularly but was growing increasingly concerned about the risk of contracting AIDS. “He decides he's going to get married,” Cayne says. “And he's one of the guys that's dating Barbara Walters. She's dating the
schvartze
from Massachusetts [Ed Brooke, the first black U.S. senator and later a special limited partner at Bear Stearns]. She's dating Alan Greenspan. She's dating him. He says to me, ‘I've decided I'm going to marry Barbara Walters.'… The very next day in the papers: She's engaged to Merv Adelson. I never said a word. Now, normally, you know, if it was one of my buddies, I'd say, you know, ‘Pretty good call there, pal. You're marrying her, except for that she's marrying somebody else. It's not even going to be a real marriage because that's called bigamy.' But I didn't say a word.”

Along with the daily car rides—and as had been foreshadowed by their very first meeting in 1969—bridge turned out to be the skeleton key that unlocked any impediments to Cayne's rapid rise at the firm. In 1967, five years before becoming a partner at Bear Stearns, Cayne had ascended to the rank of a bridge “life master,” courtesy of the American Contract Bridge League. In contrast, Greenberg was a mediocre bridge player at best, by his own admission. Nevertheless, Greenberg pushed Cayne to “teach me the game and I'll become your partner.” At the time, Cayne said he thought about how having Greenberg as his bridge partner would hurt his career at Bear Stearns. Supposedly, he declined Greenberg's offer.

But not for long. Soon enough, Cayne reversed course and decided that taking Greenberg under his wing—at the bridge table, anyway— would pay dividends. By November 1977, Cayne's five-member team— including Greenberg and Jim Jacoby, a Bear Stearns broker from Dallas—won the Reisinger team championship at the American Contract Bridge League's fall championship held in Atlanta. Their margin of victory was tiny but good enough to win and to qualify the team for the 1978 International Team Trials, the first step toward potentially being the country's representative to the 1979 world team championship. Cayne refered to the victory as “a miracle” that had to do more with some of the nuances of bridge than Greenberg's skill. “It happened because you have to play bridge to understand it,” he said. “An uneven partnership
can be very effective if the uneven guy just doesn't get in your way.” When Alan Truscott, of the
Times,
wrote about Cayne's victory, he refered to the team as “the Greenberg team,” a slight that must have ticked off Cayne. (Cayne said this never bothered him.)

F
OR SOME AT
Bear Stearns—and as if there weren't already enough pitfalls in a Wall Street career—playing bridge became an occupational hazard, what with the two top partners at the firm playing on the same team and winning national and international tournaments together. “Playing with or against the boss can be a tricky business,” Alan Truscott wrote in the
Times
in 1979. “Consider, for example, the plight of Jim Rosenbloom, a young New York expert, in the final of the Big Apple Regional Knockout Team Championship played earlier this summer.” Rosenbloom had just joined Bear Stearns and found himself opposite Greenberg and Cayne. “Would you try to impress the bosses with your shrewdness?” Truscott wondered. “Or would you concern yourself with keeping them happy? The latter might seem more important in view of the fact that one of the bosses was heard to announce cheerfully, ‘If Rosenbloom wins, he'll be out of a job tomorrow.’” The question for Rosenbloom quickly became moot in the Big Apple Regional because Greenberg's team “galloped to an easy victory.” Soon enough, though, Rosenbloom was playing on the same team as his bosses, Greenberg and Cayne, and they were all winning.

By 1982, Truscott was reporting how “bridge experts in a favorable locale can multiply like the proverbial rabbit, although rather less rapidly.” He cited Bear Stearns as an example of this phenomenon. In 1975, Truscott explained, Bear “had one bridge expert, Jim Cayne, and one enthusiast, Alan Greenberg, who wanted to be an expert and with Cayne's help soon became one.” Truscott described Cayne as “an ebullient fast-talking character with a great will to win.” Seven years later, Bear Stearns had ten bridge players, two who had won world titles and four who had won national titles. “So students who devote their time at college to playing bridge now have the perfect answer to their complaining parents,” Truscott wrote. “They are preparing themselves for a successful career in the world of finance.”

Cayne claimed that in 1983, two years after winning the gold medal at the Maccabiah Games with Greenberg as his partner, Cayne told Greenberg he had decided to give up tournament bridge. What he didn't tell Greenberg was that he had decided to quit so that he could get out of having Greenberg as his partner. The team had suffered an embarrassing loss at the Grand National Team Championship, and Truscott had
written that up in the
New York Times
. “When you can't win, you lose your mojo,” Cayne said. “I couldn't win. Couldn't win with him.”

Cayne's ultimate solution to the problem was, he said, to stop playing tournament bridge for six years. The truth appears slightly more complicated, though. Throughout the 1980s, Cayne's name appeared regularly in Truscott's bridge column, sometimes playing with Greenberg, sometimes with Chuck Berger and others. In any event, by 1989, Cayne was back playing tournament bridge with a passion but without Greenberg on his team. Indeed, Cayne designed his vacation time around these tournament bridge events, which take place in varying locations around the country three times a year for around a week at a time. The tournaments are extremely intense, with play beginning in the afternoon and continuing until late at night. Cell phones and BlackBerry-type devices are not permitted—not that Cayne used them—and during matches, players are not to be interrupted. “I got back into tournament bridge and it became part of my life,” Cayne said. “Every four months I'd go away and play for a week somewhere. That was always my vacation. Christmas, we'd go for a week and a half, two weeks, to Florida or whatever, but I never took time off during the week or anything. The summers, I would go down to the shore on Friday, usually with Lewis, until he died, and then went down myself. I'd end up going down Thursday night on a chopper so I could play Thursday night, play golf Friday morning, go back to my house in Jersey, whatever. I never had an issue with being unavailable ever.”

B
RIDGE ASIDE, THERE
was a firm to run, and Greenberg wasted little time after Lewis's death in putting his own mark on it. He used to tell people, “Tomorrow we're going to do more of the things we did today, only better.” According to a former Bear Stearns senior managing director, “That was the entire strategy of that firm. It didn't matter what financial markets did. It didn't matter what innovations took place. It didn't matter that other people's cultures changed. It didn't matter. That's what we're going to do.” For close to twenty years, that proved to be effective. One of the ways Greenberg chose to reinforce his business strategy with his troops was through an incessant stream of lighthearted but nonetheless often scolding memoranda that he sent to his partners. To do the admonishing, he created an alter ego, a Charlie McCarthy for his Edgar Bergen, in the form of one Haimchinkel Malintz Anaynikal, a “famous philosopher” whose role appeared to be to remind everyone to be frugal at all times. “We had to start doing things,” he said of the reason the memo writing started. “The firm hadn't made much money the few years
before that, and the times of course helped, there's no question about that. But we stayed alive and we started making a lot of money.” March 13, 1979, marked Haimchinkel's first public appearance. Greenberg informed his partners that the firm had just signed the papers for a $12 million long-term loan from an insurance company to replace one with the First National Bank of Chicago. “The implications and the actual dollar savings of this agreement are of tremendous importance to Bear Stearns & Co.,” he wrote. He also said the financial results for February were “great.” “The developments at Bear Stearns certainly seem positive and as a result we will, of course, intensify our surveillance of all positions and expenses,” he continued. “You know how I feel about the dangers of overconfidence. It certainly looks like we have a dynamic future in store as long as we remember the words of the famous philosopher, Haimchinkel Malintz Anaynikal: ‘thou will do well in commerce as long as thou does not believe thine own odor is perfume.’” A week later, he sent around a news article to his partners and “other potential perfume lovers” about how Dean Witter, one of Bear's competitors, had reported an $886,000 second-quarter loss.

On June 15, Greenberg informed his partners that in the first quarter of 1979, the firm had generated revenue of $51.6 million, or 2.1 percent of Wall Street's revenues, and pretax income of $11.3 million, which was nearly 5 percent of the pretax profits for the entire industry. The message was clear: The firm's tight lid on expenses had enabled Bear Stearns to be relatively more profitable than its Wall Street peers, an achievement Greenberg wanted his team to repeat. “I would also like to add that the last three weeks have been a thing of beauty,” he wrote. “Every department is really boiling and some of the new people that we have taken on are starting to make real contributions. Because of this good news, I think it is time for us once again to spend some time reading the works of, and reflecting on the thoughts of, Haimchinkel Malintz Anaynikal.” On January 30, 1980, Greenberg was again happy to report good news about the firm's financial results. “Some of the things that have happened to us have been due to our own efforts, but equally, some of our good fortune of late has been due to luck,” he wrote. “I have been around long enough to know that shoe usually falls on your head when you least expect it.” He then quoted Haimchinkel Malintz Anaynikal's observations from his March 1979 memo.

On May 28, he reported that May 1980 “appears to be the best month in the history of Bear Stearns” but that “before we get carried away, there is one thing that I do want to emphasize. We are working with more capital than ever before, so if every month is not a record-breaker,
we are probably getting lazy. We have plenty of room for improvement and there are still a number of leaks in the dike. In fact, the only area that I think is running at 100% efficiency is the error account. I implore our partners who supervise salesmen to increase their suveillance of all personnel. I want all partners in the trading area to pay particular attention that our positions do not increase dramatically in size and that we continue to assiduously follow the rules of Haimchinkel Malintz Anaynikal in the area of loss-taking, freshness of positions and body perfume…. It is up to all of us to fight our unrelenting enemies—complacency, over-confidence and conceit.” On October 17, he informed his partners that the day had been the biggest in the history of Bear Stearns, by 20 percent, in terms of “number of tickets and overall commission revenues.” He then reminded everyone that the “philosophy and works” of Haimchinkel Malintz Anaynikal were must reading for everyone at the firm.