Bear Stearns CEO quitting amid losses

Bear Stearns Cos. Chief Executive James Cayne is resigning under pressure from shareholders upset over the Wall Street firm’s losses amid a slew of problems sparked by the sub-prime mortgage crisis, according to a published report.

Cayne, 73, started notifying Bear Stearns directors Sunday that he planned to give up his CEO post but remain as chairman, the Wall Street Journal reported on its website Monday night, citing unidentified people the paper said were familiar with the matter.

Alan Schwartz, the company’s president respected for his deal-making savvy, is expected to succeed Cayne as CEO. Schwartz is 57.

Company representatives couldn’t be reached for comment late Monday.

Bear Stearns, one of the nation’s biggest underwriters of mortgage-backed bonds, might be the Wall Street investment bank most directly exposed to this year’s credit squeeze. Last summer two Bear Stearns hedge funds set up to bet on risky mortgage debt collapsed, helping set off a broad credit crunch.

Bear Stearns recorded a fiscal fourth-quarter loss, the first quarterly deficit in the company’s 84-year history, as the firm wrote down billions of dollars in debt securities. Its profit for all of fiscal 2007 plunged 89%. The results prompted Cayne to pass on his 2007 bonus. Members of the company’s executive committee also did not receive year-end bonuses.

The company’s stock is down 53% in the last year.

But until now, Cayne had managed to keep his job even as peers like Citigroup Inc.’s Charles Prince and Merrill Lynch & Co.’s Stan O’Neal lost theirs. A nearly 40-year veteran of Bear Stearns, Cayne took the CEO job in 1993 and became chairman in 2001.

Cayne later came under fire after the Journal reported that as the two Bear Stearns hedge funds faced insolvency, he was playing golf and bridge without access to e-mail or a telephone.