Bear Stearns and a Sleeping Board?

The WSJ ran a story about the waning days of Bear Stearns and the concerns expressed within the investment banking firm in the days and months leading to its ultimate demise.  At one point, buried in the piece, the WSJ described the board as "12 men largely handpicked by Mr. Cayne."  We have more or less made this point before.  The board was not diverse and contained a large number of individuals who had served with Bear Stearn's management for more than a decade.  And they were well paid. 

We don't know what happened inside the board room.  But serving for long periods of time with the same management can easily impair a director's independence.  Moreover, the lack of diversity on the board probably reduced the likelihood that management would hear alternative views.  What Bear Stearns (and the shareholders of Bear Stearns) needed was a board that could ask management tough questions.  The dynamics of this board suggest that this is not what they got.