Bear Stearns' Secrecy Comes Home to Roost

Here's the tricky thing about keeping secrets on Wall Street: It's terrific fun until it isn't. Just ask Alan Schwartz, the CEO of punch-drunk Bear Stearns. His firm was the first domino to topple, setting off a cascading chain of events that has spread from mortgages, to derivatives, to the muni bond market and now the U.S. economy at large. It wasn't all Bear's fall, mind you -- they were just unlucky enough to be first.

It was the huge weighting in subprime mortgages that caused two Bear Stearns funds to collapse last summer. The financial world was sideswiped by the revelation because Bear Stearns, like most hedge funds and securities firms, loves its secrets. But the lack of visibility only amplified the waves of panic, and the credit crunch was unleashed.

Now Bear Stearns is the subject of rumors that it's low on reserves and faces a cash crunch. Those rumors are especially harmful because they can scare customers away. And because there is no hard evidence to the contrary, only Schwartz rushing over to CNBC studios to channel Mark Twain and deny rumors of his firm's demise.

The answer is what Bear Stearns and others should have done last summer: shine a light on its books to show what the risk really is. Schwartz told CNBC he has numbers to show the company has ample liquidity.

If that's really the case, it's long past time to let the public see them.