"Bear Trap" insider secrets
Local co-author on Bear Stearns collapse part of national book promotions
BY MARY LANCASTER INDEPENDENT WRITER
I slander Andrew Spencer knows a fair amount about fishing, and now he knows plenty about the twists and turns of investment banking. Spencer, who heads the literary division of Creative Management Group in New York, was asked to coauthor a book about the March demise of investment banking giant Bear Stearns, working alongside an anonymous and former Bear Stearns senior managing director who knew the background, but did not initially wish to divulge his name.

PHOTO BY ROB BENCHLEY Andrew Spencer's book, "Bear Trap," hit bookstores this Monday.

"Bear Trap," was released nationally on Monday, following the bankruptcy of Lehman Brothers and the buyout of Merrill Lynch by Bank of America. The collapse of the two Wall Street giants over the weekend accelerated the release date of Spencer's book, which was to be in bookstores on September 22.

Liz Claman, host of the morning Fox TV business news program, was to interview Spencer and his co-author, on September 22, yet at press time, the interview with Spencer and the anonymous and former Bear Stearns employee, was being rescheduled for an earlier date.

"Liz broke the story on Aug. 1 that the book was being written and that created a groundswell to know who the guy is and what he has to say," said Spencer, explaining that the first third of the book explains Wall Street terminology and the rest is a day-by-day account of the Bear Stearns meltdown that occurred within one week. "There is a lot of talk about specific events within the context of investors and their strategies that week because a lot of them were betting against Bear. There is a lot of talk about what went on within the headquarters.

"It really is a story of rumors becoming truth and a lot of people at Bear fighting this tide that was gaining steam, and about what the major players are doing now. There are a couple of people in jail and there are a couple of people who are doing very well for themselves. It's a wrap up. I learned a lot."

Bear Stearns was in its 85th year and positioned as the country's fifth largest investment bank when the subprime mortgage crisis was at a peak. On Monday, March 10 rumors started flying on Wall Street that Bear Stearns was teetering on financial disaster because it had invested heavily in mortgage bonds.

As borrowers began defaulting on their loans and the value of mortgaged properties dipped below the value of the loans, investors holding the bonds sold them back to Bear Stearns. While the bank held some $11 billion in cash reserves, the rumors were that it did not have enough money to cover all the returned bonds. The returns continued and the rumors could not be squelched, so by the end of that week in March, Bear Stearns found itself on the verge of declaring bankruptcy when J.P. Morgan, another major investment bank, offered to absorb Bear Stearns.

Spencer said the book's publicist is setting up interviews with various business-oriented media outlets for him and his co-author. On Saturday, Oct. 11, the men will talk about the book at The Hayloft at Bartlett's Farm. Though Spencer has for many months written the Tight Lines column for The Nantucket Independent, he is stepping down from that role on Oct. 1 because he has three more books lined up to write through his work at Creative Management Group. He said one is business-related, another is about a corporate scandal and the third is a non-fiction account of teenagers in the mid-west. I