NEW YORK -- The shouts, hoarse and high-pitched, rang out in the cavernous boardroom late Sunday at Bear Stearns' headquarters on Madison Avenue. Alan D. Schwartz, the chief executive of Bear Stearns Cos., was briefing top executives on the deal he had just struck under duress with JPMorgan Chase & Co. and the Federal Reserve Bank of New York: Their stock in Bear was now worth $2 a share.
Just like that, $100 million stakes and more in Bear stock were largely worthless, and senior executives such as Thomas A. Marano, the head of mortgages, and Bruce Lisman, a co-head of equities, were furious.
Entering the weekend, Bear executives felt confident that the firm could be sold for several billion dollars, if not more. But $260.5 million - how could Bear have sold for such a price? Why didn't the firm seek financial help earlier, they and others asked, as they grilled Schwartz and his chief financial officer, Samuel L. Molinaro Jr., for answers, according to people who were briefed on the meeting.
For these men, and many others like them who have spent the bulk of their professional lives at Bear, the sudden collapse was unfathomable.
More so than other firms on Wall Street, Bear had encouraged its employees, from secretaries to top executives, to be long-term holders in the company's stock, and the employees own more than 30 percent of the firm.
For James E. Cayne, the firm's chairman and former chief executive, holding on to his Bear stock was a point of pride, and he rarely, if ever, sold. A billionaire just over a year ago when Bear's stock soared past $160, his 5.8 million shares are now worth about $28 million at yesterday's closing price of $4.81.
Schwartz has 1.02 million shares, according to Bloomberg News.
Across the firm, executives and employees declined to speak publicly, a reflection of the still-fluid events as well as a reluctance to anger their prospective bosses from JPMorgan who were already on the premises yesterday, eyeing their new investment. But privately they expressed raw dismay, their voices heavy with sadness and shock.
"My life has been flushed down the drain," said one person. There was talk yesterday that with their life savings nearly depleted, some executives had moved quickly, putting their weekend homes on the market.
In an attempt to soothe jangled nerves, the firm sent an e-mail message to employees yesterday assuring them that Bear was still in business and that they would get their salaries - cold comfort to bankers who receive upward of 90 percent of their compensation in a year-end bonus.
Bear also told employees that grief counselors were standing by.
"The stability of your world is shattered," said Dr. Ari Kiev, a psychiatrist who counsels financial executives. "You are angry at the firm for failing you. But it's more than money. It's the shame and embarrassment. Now the question is, can you pay for the house and do you give up the second car?"
To be sure, there have been some Bear stock sales. Cayne's predecessor, Alan Greenberg, has sold over $50 million in shares since early 2007, and Jeffrey Mayer, a top fixed income executive, sold $9 million in stock in December for $89 a share. Schwartz sold $6 million at the same time.
Cayne and Schwartz declined to comment yesterday.
Schwartz reportedly told people at Bear that the offer for $2 a share was the best available deal that he could make that would please all the firm's constituencies.