News of Lane's appointment was first broken by CNBC's David Faber, and later confirmed by Bearn Stearns.
Lane, 65, is one of the most experienced investment professionals on Wall Street; he worked for Sandy Weill, when he ran Travelers' Group, and joined the money management firm Neuberger Berman in 1998 to ultimately become its CEO. He joined Lehman after the firm purchased of Neuberger.
But the hiring of someone of Lane's skill set fits a familiar pattern on Wall Street and at Bear Stearns in particular when firms find themselves under intense regulatory scrutiny. In the late 1990s, when the SEC launched a probe into Bear's clearing unit over allegations that processed trades for so-called bucket-shop brokerage firms, Bear removed the head of the clearing department and replaced him with a former SEC official, Richard Lindsey. Lane replaces Richard Marin who the firm says will remain at the company as his adviser.
It's unclear what the SEC inquiry into its hedge-funds' collapse will turn up, if anything. Bear Stearns officials are already trying to downplay its severity, pointing out that the SEC has only begun what's known as an "informal inquiry" rather than a full fledged investigation. But officials at the SEC say the only difference between a formal order of investigation and an informal one is the company's level of cooperation. If Bear decided not to turn over documents, as have been requested, then the SEC enforcement staff will ask SEC commissioners to allow the staff to subpoena the information and a formal investigation will begin.
Lane's stature, and recent moves to increase the firm's oversight of its asset management business, may help persuade regulators that Bear is making a good faith effort to implement controls that were missing in the past and caused the two funds, which invested in risky securities backed up by subprime mortgages, to implode. But Bear will likely face stiff questions as to why the firm had two different types of controls in place.
The latest news about the document request from the SEC shows that intensity of its inquiry is growing. CNBC has reported that Bear has stiffer controls for proprietary investing when it risks firm capital in the markets, than it does in its asset management business, where its customers are often wealthy individual investors.
The firm will also likely face questions about what senior management knew about the risk controls in the asset management division. Marin, the former asset management chief, reported to the firm's co-president and chief operating officer Warren Spector, who before the hedge-fund morass at the firm was considered the heir apparent to Chief Executive James Cayne.
People at Bear Stearns say Lane, who quit Lehman just yesterday, but had been in talks with Bear for a few days, will still be reporting to Spector.
Shares of Bear Stearns fell $3.50, or 2.43%, to $140.50, following the report.