THE global financial system was threatening to go into meltdown. Central banks were desperately trying to figure out how to prevent collapse.

But one anecdote summed it up: Jimmy Cayne, the Wall Street veteran, was hundreds of miles from his office enjoying a bridge tournament. Did it matter that his bank, Bear Stearns, was about to collapse, exhausted and enfeebled, into the hands of JP Morgan? Hardly.

Cayne had already extracted hundreds of millions of dollars from the bank in pay, bonuses and stock options. He had made ample money while investment banks were riding high on the tidal wave of easy credit.

Together with a clutch of other big-hitters in the global financial system, he had reaped the rewards. He might have wished that he could have made a more dignified departure - and that the bank he had dominated for so long might survive and prosper without having to be bundled into the arms of its rescuer JP Morgan. But make no mistake: Cayne, a former scrap-iron salesman, is one of the lucky ones; from the mayhem, he has emerged a very, very rich man.

Cayne is not alone. There are others who reaped huge rewards from their time as masters of the investment-banking universe. Stan O’Neal, who left Merrill Lynch (and let no one suggest for a moment that he was sacked) walked away from his job with a useful $161m (£81m). Chuck Prince, who quit as chief executive of Citigroup, left with a $10m bonus and share options worth $28m. And Angelo Mozilo – chief executive of the mortgage lender Countrywide and at the very eye of the financial storm engulfing the American property market – received more than $120m in pay and from selling shares in the company. Huge sums, huge rewards – and all for presiding over a bubble that has now burst with devastating results.

When O’Neal, Prince and Mozilo appeared in front of a House of Representatives committee earlier this month, the chairman Henry Waxman put his finger gently but firmly on the point. He said to the trio of former financial stars: “You’re in the middle of an enormous debacle. It seems like everyone is hurting except for you.”

With the huge pay-offs, there is little suffering for the men who presided over the current crisis and whose banks fuelled it.

In the case of O’Neal’s departure from Merrill last autumn, a deal was done to ensure that his pay-off would be boosted by almost $90m. Had he been sacked, he would have been forced to muddle through with a mere $70m or so. But by calling his departure “retirement”, he was allowed to hold on to deferred compensation worth a further $90m, bringing the total pay-off to about $160m. That sum would be sufficient to pay the salaries of the seven people who sit on the US Federal Reserve Board for 160 years.

But equally striking is the manner in which O’Neal and the other one-time giants of investment banking conducted themselves while they were still in a job. Did they live luxurious lifestyles? Certainly. After being ousted from Citigroup, Prince put his Connecticut house up for sale. It was described as a Tudor-style manor house with a couple of acres of land, a barrel-vaulted hallway, sauna, shower, exercise room and swimming pool – as well as five bedrooms. The price: a shade over $6m.

Furthermore, despite having been paid huge sums for their managerial expertise and banking wisdom, none of the former leaders seems to have spotted – let alone prepared for – the gathering storm. Last July, just a month before the credit crunch began to bite, Citigroup’s Prince was showing not an iota of concern about the way things were heading. The bank was “still dancing” in the leveraged buy-out business, he declared in an interview.

By November, Prince had “retired” as chief executive and chairman of Citigroup. Citi announced it was swallowing $11 billion in write-downs. The dancing had stopped.

Under O’Neal’s stewardship, Merrill became the world’s largest generator of mortgage-backed collateralised debt obligations (CDOs). He was happy to see the business’s legendarily powerful retail operation decline as a share of the Merrill empire. His strategy was disastrous: as the credit crunch began to bite last summer, the bank was left with huge inventories of CDOs for which it could find no buyers.

Two months ago, with O’Neal gone, Merrill Lynch reported the worst quarterly results since the bank was founded nearly a century ago: it lost $9.8 billion in the final three months of 2007 after being forced to swallow $14.6 billion in write-downs.

And it has emerged that, just as the credit crunch was biting, O’Neal spent much of August and September trying to improve his golf handicap. One of his favourite courses was Vineyard Golf Club, on Martha’s Vineyard.

Golf is not the only game to have figured large in the lives of the bankers that have been so badly wrong-footed.

Last July another crisis was beginning to come to a head at Bear Stearns. Two hedge funds were losing agonisingly large amounts of money and investors were clamouring to withdraw their investments. But during 10 days of the crisis, Cayne, the bank’s 74-year-old chief executive, was away in Nashville, Tennessee. What was he doing? Playing in a bridge tournament, of course. To avoid distractions, he wasn’t carrying a mobile phone or e-mail device. He would phone Bear Stearns’ Wall Street offices in the mornings, but afternoons were devoted to his favourite card game.

During the summer, he also spent days at his New Jersey golf club, chartering a helicopter at $1,700 a flight to take him there. During June alone, Cayne managed 13 rounds. As the hedge-fund crisis began to engulf Bear, Cayne shot a round of 88.

Even when staying in New York, he would rarely be in the office beyond five in the evening; he preferred to be at home with his wife Patricia in their apartment on Park Avenue.

Until last year’s credit crunch, Bear Stearns had been successful – and Cayne well-rewarded. He took home $34m in pay in 2006. His personal stake in the bank was, at one point, worth more than $1 billion.

When the deal to sell the bank to JP Morgan was done a week ago, the value of Cayne’s holding was $13.4m – a far cry from its peak, but scarcely likely to cast him into poverty.

The rewards – both of doing a job and for losing it – in America rather overshadow the sums received on the other side of the Atlantic by ousted heads of banks that have stumbled.

Peter Wuffli, removed last year as chief executive by Switzerland’s UBS, received part of a £16.5m bonus, with two others, for their performance in 2007. Together with Huw Jenkins, who stepped down as head of UBS’s investment banking business, and Clive Standish, who retired as the bank’s chief financial officer, Wuffli will share a further £7.5m this year and £22.5m in 2009. In the fourth quarter of last year, the bank made write-downs of $14 billion.

Modest compared with the payouts in America? Certainly. But even the UBS cash overshadows the money handed to Adam Applegarth, former boss of Northern Rock. He had said that he would stand down from his job in February, then unexpectedly announced that he would leave in December. No reason was given for his change of heart. But whatever the thinking behind the decision, it helped to boost his pay-off.

Under Northern Rock’s severance scheme, Applegarth was entitled to a year’s money – £760,000 in his case.

But on top of that, he was entitled to the equivalent of his bonus in the previous year. So quitting before the end of 2007 put him in line for a further £660,000, his bonus in 2006.

How much did he actually receive? Northern Rock never said – except to insist that it was “substantially less” than the full entitlement.

And it was certainly nowhere near the $160m received by Merrill Lynch’s Stan O’Neal.

Explore Industry Sectors

• Banking & Finance

• Construction & Property

• Consumer Goods

• Engineering

• Health

• Industrials

• Leisure

• Media

• Natural Resources

• Retailing

• Support Services

• Technology

• Telecoms

• Transport

• Utilities

Times Recommends

• BA chief waives bonus after T5 fiasco
• Prospects of cheaper loans hit as Libor soars
• Rice price dives as US and Japan set to unlock grain pact