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from Breakingviews:

Memo to Wall Street: more Ace Greenberg please

By Antony Currie

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Wall Street needs more leaders like Alan “Ace” Greenberg. The onetime Bear Stearns boss, famed for his pithy missives to staff, died on Friday. He was 86. Though he was no longer in charge, the firm’s 2008 collapse is a notable blemish on an otherwise illustrious career. The industry could use more of Greenberg’s scrappy PSD: poor, smart and driven.

The shorthand was how he described the people he wanted to work for Bear, perhaps in his own image. Even after he became chief executive in 1978, and until 1993, his office was the trading floor not the executive suite. And unlike most bosses, he answered his own calls. Greenberg also believed in sharing at least some of the wealth, insisting that his senior managing directors donate at least 4 percent of their income to charity.

As CEO, he had a nose for sniffing out risk, and largely avoiding it. Greenberg scrutinized trading reports each morning, congratulating the moneymakers and dissecting the underperformers. Bear prospered in 1994, when Greenberg was still an active chairman and whipsawing rates landed other banks in trouble.

Greenberg’s cost controls are the stuff of investment banking lore. He once distributed one of his single-page memos explaining that the bank would no longer be buying paper clips. He also once chided employees: “This may come as a surprise to some of you, but Federal Express is not a wholly owned subsidiary of Bear Stearns.” Such pointed attention to the bottom line would be useful at today’s earnings-challenged institutions.

Are banks too big to indict?

The great 19th century English jurist, Sir James Fitzjames Stephens, once wrote that murderers were hung not for reasons of revenge or deterrence — but to underscore what a serious breach of the social compact had been committed.

Federal District Judge Jed S. Rakoff was making a similar point when he recently called attention to the lack of criminal prosecutions in the wake of the 2008 financial crisis. Consider the 1980s Savings and Loan crisis. The losses were minuscule compared to this recent paroxysm, but they still led to hundreds of criminal convictions.

That looks highly unlikely here. The federal statute of limitations for fraud, generally five years, is rapidly running down. There are reportedly a few cases in process. But the odds are that if there are any indictments, they will be in the pattern of the indictment of Goldman Sachs banker Fabrice Tourre, who has been left holding the bag for a complex scheme to load up clients with worthless securities. Email trails leave little doubt that far more senior figures were aware of the purpose of the deal. The firm also executed other similar deals that haven’t been prosecuted.

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