Bear Stearns

About Bear Stearns

Bear Stearns collapsed in March 2008, six months before Lehman. Bear Stearns was the fifth largest investment bank. The firm was heavily exposed to subprime mortgage backed securities. A liquidity crisis on March 10, 2008 caused counterparties to withdraw funding. The Federal Reserve provided a 28 day emergency loan through JPMorgan Chase. On March 16, 2008, JPMorgan acquired Bear Stearns for 2 per share, down from 172 a year earlier. The Federal Reserve provided 30 billion in financing for toxic assets. The original offer was 2 per share, later raised to 10. Bear Stearns CEO Alan Schwartz testified before Congress. The rescue of Bear Stearns made the subsequent decision not to rescue Lehman more surprising. The Fed assumed 30 billion in risky mortgage assets to facilitate the deal.