GS Goldman Sachs Group Inc

By Justin Baer 

A decade after the financial crisis, the U.S. economy is cruising again and the stock market keeps climbing. But for many of the men and women at the center of the extraordinary events that nearly led to the collapse of the U.S. banking system, those frantic days changed their lives permanently.

Some made a name for themselves, steering their companies through chaos, bringing back a fortune by betting on the housing market's collapse, or as part of the government's effort to prop up the system. Others have retreated from the public eye or sought to reinvent themselves, avoiding the media, seeking work in a new industry, even changing their names. Quite a few tried to make sense of the dizzying events -- or justify their own actions -- with crisis memoirs.

The Wall Street Journal checked in on 48 of the bankers, government officials, chief executives, hedge-fund managers and others who left a mark on the financial crisis to find out what they are doing now. Starting today with former Bear Stearns CEOs Jimmy Cayne and Alan Schwartz, and for the next few months, we will be sharing their stories.

Alan Schwartz was the last chief executive of Bear Stearns before the venerable securities firm sold itself to JPMorgan Chase & Co. as a way of avoiding collapse. A decade later he is trying to challenge Bear's rescuer as an adviser on megadeals.

From an office a few blocks south of Bear's old Madison Avenue headquarters, Mr. Schwartz oversees Guggenheim Partners LLC's foray into investment banking. The upstart firm hired Mr. Schwartz in 2009 as executive chairman and assembled around him a team of bankers and traders, some of whom also carry scars from the 2008 financial crisis.

Together they are trying to turn the upstart into a major force in the investment-banking world dominated by incumbents such as JPMorgan and Goldman Sachs Group Inc.

Guggenheim advised on 29 mergers and acquisitions in 2017 with a combined value of $114 billion, 16th among investment banks, according to Dealogic. Goldman finished first, while JPMorgan was second.

Five years earlier, Guggenheim had placed at No. 135.

"Building something, instead of just working somewhere, was what lured me to Guggenheim," he said in an interview. "The businesses we are building are ones that can grow for a long period of time."

Guggenheim has faced some pressure of its own in recent years, contending with internal unrest and scrutiny from regulators. Mr. Schwartz, as the firm's elder statesman, is being counted on to try to bring calm and stability to a burgeoning powerhouse.

A decade ago, Mr. Schwartz's bid to do the same at Bear fell short. His appointment as CEO in January 2008 capped a career at the firm that began in 1976.

Mr. Schwartz spent what would be a brief stint as CEO racing to overcome suspicions that Bear wouldn't survive the worst financial crisis in decades. By March, Bear had lost the confidence of investors and clients, forcing Mr. Schwartz to turn to JPMorgan and the U.S. government for help.

Mr. Schwartz negotiated the firm's sale to JPMorgan, a deal backed by support from the Federal Reserve.

On Sunday, March 16, he gathered Bear employees at the firm's Midtown Manhattan boardroom to deliver the news. Many had spent their entire careers with the firm, known for its scrappy, underdog culture, and had accumulated large holdings of Bear shares, which had been a top performer during the U.S. housing boom, at one point hitting $159 each.

"We have a deal," he said, "but you're not going to like it."

JPMorgan's final offer: $10 a share. The agreement ended the firm's independence.

Mr. Schwartz said he expects Guggenheim to endure.

"Long after I'm gone, it will be a great firm," he said.

Write to Justin Baer at justin.baer@wsj.com

(END) Dow Jones Newswires

March 17, 2018 08:14 ET (12:14 GMT)

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