See November 5, 2008 Wall Street Journal Article:
“There are times when you can hardly believe what you have just read. This latest series of financial news articles is clearly one of those times.
In an somewhat shocking and puzzling move the Federal Reserve Bank of New York revealed that it has hired Michael Alix, the man who was in charge of risk management at Bear Stearns.
The collapse of Bear Stearns cost taxpayers a whopping $29 billion—the amount of money the Federal Reserve had to give JP Morgan Chase to step in and make good Bear Stearns’s obligations. More billions will likely be needed to be paid by taxpayers in attempt to end the banking crisis that first became evident by the collapse of the Bear. And that is what makes this latest move all the more curious:
Of all the risk management specialist on the street, why did the Fed tap the guy who’s firm started the ugly chain of failure that to this day, grips the markets and has the U.S. banking system on very shakey ground?
Before taking the risk management position at Bear Stearns, Mr. Alix had spent 10 years with the company, and eight years at Merrill Lynch, another massive investment bank that failed in September. Quite a resume when one considers he is now in charge of ensuring the safety and future of the U.S. banking system. Yes, head scratching is in order.
So now, as the U.S. economy faces what is clearly one of toughest times ever, Mr. Alix—one of the main players in this unseemly drama has been given the high-profile job of making sure the banking system becomes more stable and less susceptible to future calamity.
How America expects to restore health and credibility to Wall Street by giving prestigious positions of influence and oversight to the very individuals who helped cause the problems in the first place is one of the mysteries investors are now grappling with and just another sign the good ‘ol boy network is still alive and well on Wall Street.
The securities fraud attorneys at our firm are currently investigating claims related to Bear Stearns, Lehman Brothers, Charles Schwab, Wachovia, Fannie Mae/Freddie Mac and Merrill Lynch. If you have lost money while dealing with any of these firms, please contact our office for a free case evaluation.