Alan C. Greenberg

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Alan C. 'Ace' Greenberg

Alan C. 'Ace' Greenberg led Bear Stearns for many years, building it into one of the most powerful global investment banks and seeing it through its collapse in the financial crisis of 2008. He died on July 25, 2014 at the age of 86. He had started out as a clerk in Bear's stockroom and moved up to become its chief executive in 1978, chairman in 1985 and chairman of the executive committee in 2001.

When he took the reins at Bear in 1978, it was a private partnership with about 1,000 employees and $46 million in capital. He expanded shareholders’ equity to $1.8 billion and the headcount reached 6,300 by 1993, when he handed over the company to James Cayne.

Greenberg was known for hiring ambitious young people from all five boroughs of New York City and beyond, including Jews and Italians from Brooklyn, Queens and the Bronx, which was unusual for "white shoe" firms at the time. He said he looked for people with “PSD” degrees, meaning “poor, smart and a deep desire to become rich.” [1] Some of the people he hired went on to build big firms of their own.

He moved the firm into investment banking, where it was traditionally weak, and transaction clearing, a business he discovered earlier than many of his rivals. At one time those businesses generated a quarter of the company’s revenue.[2]

He was also known for being prescient in diversifying the firm toward both retail brokerage and securities clearing for smaller firms ahead of the negotiated commission rule in 1975. Before the rule was instituted, commissions were fixed at a uniformly high level, ensuring big profit margins for the brokerages who were NYSE members. When negotiation was permitted, margins shrank and the competition got tougher. Bear’s initiatives in these other areas led to the firm's growth; more than 100 smaller broker-dealers used them for custody and clearing services, and they had eight retail brokerage branches around the world by the early 1980s. [3]

Although most of the firm’s 14,000 employees lost their jobs, and some their life savings, in the 2008 meltdown, Greenberg had cashed in his stake over the years and sold $50 million in Bear Stearns shares since 2007, so he came away from the collapse almost unscathed. He signed a contract with JPMorgan to stay on as vice chairman emeritus when JPMorgan took over Bear Stearns, which allowed him to take 40 percent of trading commissions he generated. JPMorgan discontinued the Bear Stearns name in 2010.[4]

Greenberg was also known for his philanthropy, which included being involved for decade in the UJA-Federation of New York, a philanthropic organization for the Jewish community to help people in need. He hosted the group’s annual charity launch event from 1988 until 2011 at his home in New York, raising hundreds of millions of dollars. He also required senior managing directors at Bear Stearns to donate 4% of their after-tax compensation to any philanthropic organization.

Background[edit]

Alan Courtney Greenberg was born on Sept. 3, 1927, the grandson of Russian Jewish immigrants. He attended the University of Oklahoma on a football scholarship, but after a back injury transferred to the University of Missouri and graduated in 1949 with a bachelor’s degree. He moved to New York to work on Wall Street, and Bear Stearns hired him as a clerk in its stockroom in 1949. He moved to the trading floor and then went on to become chief executive in 1978, chairman in 1985 and chairman of the executive committee in 2001.[5]

The nickname "Ace" came from Greenberg's mastery over both bridge and sleight-of-hand and his habit of always keeping a deck of cards on his desk.

Publications[edit]

Greenberg published a memoir, “The Rise and Fall of Bear Stearns” (with Mark Singer), in 2010.

In 1996 he published “Memos From the Chairman”, a collection of his notes to employees, including the now famous admonition never to throw away paper clips.[6]

Education[edit]

Greenberg attended the University of Oklahoma and then transferred to the University of Missouri, where he received a bachelor’s degree.

References[edit]

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