The last of the dominos is about to fall into place with longstanding Bears Stern CEO, Jimmy Cayne, set to retire (read: be pushed) from his role as CEO. Cayne was hired by legendary Bear Sterns boss, Alan “Ace” Greenberg in 1968 as a broker, later becoming president and eventually CEO of Wall Street’s fifth largest investment bank in 1993.

Cayne’s tenure at Bear Sterns has been a lucrative one – with Forbes ranking Cayne as Wall Street’s richest executive in 2005, worth an estimated US$900 million. Cayne’s wealth has dropped dramatically since, with his 5.6% stake in Bear falling from $US950 million to only around US$400 million.

The Wall Street firm, once known for its shrewdness, was the first of the majors to be hit by the sub-prime crunch. Back in July, Bear Sterns paid more than US$3 billion to bail out two of its hedge funds (the ironically named Bear Stearns High-Grade Structured Credit Fund and the Bear Stearns High-Grade Structured Credit Enhanced Leveraged Fund). At the time, Cayne was criticized for spending his days playing golf and bridge while his firm lost billions in the sub-prime mess.

Bear Sterns shares have been mauled since, falling from a peak of US$172.61 in early 2007, to close last night at only US$71.70 – down 6.66% on news of Cayne’s departure and more than 60% below its peak.

Cayne’s fall means that three of the five largest Wall Street banks (Citi, Merrill Lynch and Bear Sterns) have lost their CEO. John Mack remains at Morgan Stanley, courtesy of his Svengali like grip over a hypnotized board, while Goldman Sachs’ Lloyd Blankfein basks in the glory of being the last remaining top-tier CEO with any credibility. Goldman Sachs, who announced a record US$11.6 billion last year profit paid Blankfein US$69.9 million in compensation in 2007.

Cayne’s demise and Bear Sterns woes will no doubt be a pleasant dose of schadenfreude for many on Wall Street. In 1998, Cayne and Stern’s obstinance almost thwarted the rescue package for Long-Term Capital Management (which at the time, was threatening the entire US financial system). Author Roger Lowenstein noted in When Genius Failed that:

[The New York Federal Reserve’s Peter] Fisher … took a call from Jimmy Cayne at Bear Sterns. Cayne, whose firm had little exposure, said Bear would not contribute to any rescue [of LCTM]. Fisher pleaded with Cayne to keep an open mind, Cayne said darkly, “Don’t go alphabetically if you want this to work.”

As blogger, Accrued Interest noted:

One firm refused to participate [in LCTM’s bailout]: Bear Stearns.

Not only did Bear skip out on what was likely the most painful, difficult, humiliating and frightening decision many of the men involved ever made, they in essence got a free ride on the result. Shortly after the bailout, the financial markets calmed down and within 6 months or so, most markets were back to where they were before the crisis. Bear benefited from that calm, but didn’t take on the risk to make it happen.

Jimmy Cayne may not be a Buddhist – but one suspects he just learnt what Karma is.