When Enron CEO Ken Lay testified in his criminal fraud trail in 2006, he accused the Wall Street Journal of bringing down his company.
"We thought The Wall Street Journal was on a witch hunt of Andy Fastow," Lay testified Tuesday, referring to a series of articles the newspaper published about the partnerships beginning in October 2001.
"It was absolutely destroying the confidence investors had in the company and driving down the stock price," he added.
A time-honored ploy! Blame the media! Today, Bear-Stearns CEO Alan Schwarz attempted the same maneuver, according to Muckraked, which obtained a copy of his prepared testimony for a congressional hearing held Thursday.
While Bear Stearns was "adequately capitalized and had a substantial liquidity cushion," the firm imploded due to the weak credit market and "the unprecedented speed at which rumors and speculation travel and echo through the modern financial media environment, the rumors and speculation became a self-fulfilling prophecy."
Poor Bear-Stearns. Ken Lay thought Enron got the shaft from the media, but back in 2001, the blogosphere was a pale shade of its current hydra-headed monster. The investment bank never had a chance.
How the World Works will have more to say about Sen. Christopher Dodd's hearing on "the response by Federal financial regulators to ongoing turmoil in U.S. credit and mortgage markets and the near collapse of Bear-Stearns," later this afternoon.