...Meet Jimmy Cayne. He's one of the biggest big shots on Wall Street: the chairman and chief executive of the investment bank Bear Stearns. The cigar-chomping Cayne is estimated to be worth about $US1.3 billion and likes to spend a lot of time on the golf course. He plays bridge with Warren Buffett and Alan Greenspan. Curiously, Cayne's life has been turned on its head by the problems that people such as Busby have suffered.
Two hedge funds managed by Bear Stearns owned billions of dollars worth of subprime mortgages, just like the one on Busby's home. The funds held them through complex financial instruments known as collaterised debt obligations, or CDOs, which had been used to parcel up and sell portions of all kinds of debt.
The securities held by the funds were supposed to be ultra-safe, and had AA or AAA credit ratings. But when mortgage defaults began to rise, it became apparent that some of these ratings were a little optimistic. By the middle of June, the rival banks Merrill Lynch and JP Morgan Chase were trying to get their money out of the crumbling Bear Stearns funds....
A five-pager from the Sydney Morning Herald
