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Bear Stearns executive resigns

August 06, 2007|From the Associated Press

NEW YORK — Bear Stearns Cos. said Sunday that co-President and co-Chief Operating Officer Warren Spector had resigned after the meltdown of two hedge funds that invested in risky mortgage-backed securities.

Effective immediately, Alan Schwartz, who had been Bear Stearns' other co-president and co-COO, will become the sole president.

"In light of the recent events concerning [Bear Stearns Asset Management's] High Grade and Enhanced Leverage funds, we have determined to make changes in our leadership structure," Chairman and Chief Executive James Cayne said.

Spector, 49, joined Bear Stearns as a trader in 1983 and spent his entire career at Bear Stearns. He had been considered a likely successor to Cayne, 73.

But the meltdown of the two hedge funds in a unit Spector oversaw put him and the firm under pressure. The hedge funds filed for bankruptcy protection last week because of bad bets on the distressed mortgage and corporate buyout markets.

On Friday, Standard & Poor's said it was considering cutting its rating on Bear Stearns' creditworthiness because of the firm's exposure on securities backed by mortgages for people with less than stellar credit. Separately, another ratings company, Fitch Ratings, downgraded $46.4 million worth of Bear Stearns bonds backed by sub-prime mortgages, or home loans to people with spotty credit histories.

Bear Stearns said Samuel Molinaro Jr. would assume the role of chief operating officer in addition to his current duties as chief financial officer.

Jeffrey Mayer, co-head of the fixed-income division, will take Spector's seat on Bear Stearns' executive committee, the firm said.

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