The 5 Dumbest Things on Wall Street: May 9

1. Cayne and Ace

In Hollywood, there was Jack Lemmon and Walter Matthau. In Washington, D.C., there's George H.W. Bush and Bill Clinton. On Wall Street, the new odd couple is Bear Stearns (BSC Quote) Chairman Jimmy Cayne and his mentor, Alan "Ace" Greenberg.

Despite their rivalry at the highest echelons of investment banking, Cayne and Ace are headed to their golden years as dear old friends, and while the firm's days are numbered, the hijinks and tomfoolery between these two are only beginning.

We wouldn't know about this brotherhood if it weren't for Ace's plans to pen a sentimental memoir in tribute to his pal. In a spirit of goodwill, he was willing to share a few nuggets with The New York Times to whet the public's appetite. It sounds like a cross between Mitch Albom's Tuesdays With Morrie and Tim Russert's Big Russ and Me.

Ace speaks poignantly about meeting Cayne at a bridge tournament in 1969 and hiring the young up-and-comer as a stockbroker at Bear. Cayne would go on to become the firm's CEO in 1993 and wrest the chairmanship away from his mentor in 2001. As fate would have it, Cayne would be famously absent from his duties, competing at a bridge tournament, last summer while the firm began to unravel.

Facing a bankruptcy that could have sparked a meltdown in the global financial system, Bear called on the government for help, and the Federal Reserve promptly bailed out the firm and orchestrated its sale to JPMorgan Chase (JPM Quote). Its stock fell from over $87 at the beginning of the year to $10.

Cayne lost nearly $1 billion in the carnage, since he was heavily invested in the firm, and he has retreated into seclusion amid harsh public criticism. Ace had already cashed out the bulk of his stake in Bear before disaster struck, and he will stay on at JPMorgan as vice chairman emeritus while he spins yarns about his glory days and basks in the spotlight.

As a charming practical joke, Ace actually charged his chum a commission of $77,000 for the sale of his 6 million shares in Bear, a rate far above the maximum $2,500 commission that employees pay for a single trade, according to the Times. That was good-natured payback for the ribbing that Cayne used to heap on his pal's nickname, making anyone who said the name "Ace" in his presence pay him $100.

In a hilarious misunderstanding between the two, Ace actually contemplated leaving Bear once, and Cayne mistakenly thought it was because he felt underappreciated. Ace will set the record straight in his book and show his sensitive side, telling The Times that he was depressed because his dog was sick.

"He had not been performing well in dog shows," said Ace.

Now, Ace says he warned Cayne about the mortgage mess -- a claim that is disputed by at least one fellow member of Bear's executive committee. While Ace blames Cayne for the disaster, the firm's CEO, Alan Schwartz, is busy blaming short-sellers and market rumors.

Nothing, however, can get in the way of this iron-clad friendship, and Cayne and Ace are still delighted to see each other around the office.

"I don't understand why he comes in," Ace told the Times. "He is not employed here anymore."

Dumb-o-meter score: 95. Bear is gone, but Ace remains his brother's keeper.

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