After appearing on The Strategy Session, we went On The Record with the former Chairman and CEO of Bear Stearns Asset Management and former Vice Chairman of Lehman Brothers, Jeff Lane.
1. What lessons have you learned from the financial crisis?
Jeff Lane: "Working for a company that's about to go bankrupt is not a good idea. So I would definitely avoid bankrupt companies. Technically, Bear Stearns didn't go bankrupt but Lehman certainly did. Selling Neuberger Berman to Lehman clearly made sense at the time. I certainly didn't know what was going to happen ultimately withLehman. The challenge coming to Bear Stearns certainly made sense in building an asset management company. Unfortunately, Bear Stearns ended up going out of business. You have to pick your spots and make the best you can of all of the opportunities."
2. What do you think could have been done differently?
Jeff Lane: "I was running subsidiaries of major companies at the time. The companies' made the global decisions that effected what ultimately happened. Neuberger Berman ended up being the crown jewel of Lehman Brothers and I still feel very good about that. I really didn't have an opportunity to do anything at Bear Stearns. I think four months after I got there they went bankrupt or technically out of business."
3. Have these lessons changed how you manage Modern Asset Management?
Jeff Lane: "Managing is a human endeavor. What you have to do is treat people as people. The nice thing about Modern Asset Management is a that it is a small bank with personalized serviceand great technology. I think there is a terrific market out there for wealthy individuals that want to be treated as individuals—they want to call a banker and get someone on the phone."
[Follow-up question: Do you think a smaller bank is better than a larger corporation?]
Jeff Lane: "I think you have to maintain a personalized touch and there is always a question and challenge of how large a company can be and still maintain the personalized touch."
4. Do you think America is heading in the right direction, in terms of financial regulation?
Jeff Lane: "I think we're heading in the wrong direction. The regulations right now are punitive as opposed to constructive. I think that the legislators are focusing on the wrong issues. They should be focusing on too big to fail and Fannie Mae and Freddie Mac as opposed to the focal group, which really didn't cause any of the historic problems. It's a populist way of running the United States, which is not constructive."
5. If you could narrow down one or two things that every investor needs to know about the financial markets, what would that be?
Jeff Lane: "You have to deal with your level of comfort. If you are sophisticated you would invest one way; if you are less sophisticated you really need an advisor you can trust. Fiduciary responsibilities have been lacking in much of the investment environments. You really need a trusted advisor to help you through many of the issues you have to deal with."
Programming note: "The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.