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“When Cayne took over, Bear Stearns grew and grew. It got involved in all sorts of esoteric stuff and they made a fortune. But it was all a house of cards,” said Belfort.

Shortly after Cayne assumed command he severed ties with Belfort’s brokerage, Stratton Oakmont — a smart move as Stratton’s financial abuses were soon to land Belfort in jail.

“He wanted to distance himself from us. We had lots of cash at the time and I don’t think it was so much about business but about image. We weren’t his sort. He wanted the business to be like Goldman Sachs. Ironic really,” said Belfort.

Cayne and Greenberg have spent most of their lives at Bear Stearns. Greenberg became chief executive in 1978 and was succeeded in 1993 by Cayne, who had been a director since 1985. In the past Cayne has taken the opportunity to praise his old boss. However, he has also not been above ridiculing him. He refused to call Greenberg “Ace” and used to fine employees $100 for using the nickname in his presence.

Speaking anonymously, critics at rival firms said last week that it was “rich” of Greenberg to attribute all the blame to Cayne. “It’s ridiculous to try and blame one man for what happened here,” said one banker. “Greenberg is a director. Didn’t he serve on the risk committee? What is it they say about people who point fingers? For every one you are pointing, there’s four pointing back at you.”

And the former chairman was in a position to know what was going on at the bank. Greenberg was chairman of Bear’s risk and executive committees as the bank built up its positions in the credit market. He recently signed on as vice-chairman emeritus at JP Morgan with a deal that gives him 40% of any trading commission he generates.

Cayne is said to be devastated by the losses at Bear and the fate of so many of his employees. He still holds the title of chairman and uses his office in Bear’s Manhattan headquarters.

Cayne is no stranger to controversy. Last November The Wall Street Journal revealed that he had been at a bridge tournament and golfing while two of the firm’s hedge funds imploded.

Warren Spector, who at the time was co-president of Bear Stearns, was at the bridge tournament with Cayne. He oversaw Bear Stearns Asset Management, the division that included the two hedge funds that eventually went bust after making bad bets on securities backed by sub-prime mortgages.

After Cayne returned to New York from the tournament, he called Spector and said he had lost confidence in him and that he should resign.

Shortly after Spector’s resignation The Wall Street Journal was given an extremely detailed account of Cayne’s whereabouts during the crisis — including dates and times of golf matches.

The paper also cited various people who had seen the bank boss smoking marijuana. In a memo to Bear Stearns employees, Cayne said that he stood by his 14-year record at the firm and that allegations of “inappropriate conduct” were “absolutely untrue”. Asked whether he smoked dope during bridge tournaments or on other occasions, Cayne said he would respond only “to a specific allegation”.

Around the same time, Greenberg threatened to leave Bear, claiming he was not getting the respect he deserved. The departure would have presented the bank with yet another public-relations blow just as it was reeling from the collapse of its hedge funds.

Cayne was told by his board to do what he could to appease Greenberg. It doesn’t seem to have worked.

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