Bear Sterns the 5th largest investment bank cracked under the credit crisis that is affecting the financial markets, it got help from the Fed and JP Morgan. It started with rumors early this week about “some bank” filing for bankrupty. Then on Wednesday the CEO Alan Schwartz got on CNBC and said “everything was fine.” Apparently, within 24 hours of that statement the counterparties started to demand cash as collateral which lead to a classic run on the bank. It’s to early to say what will happen, but I’m sure Bear Stearns will not make it as a standalone company.
Great WSJ article on the negotiations the night before the announcement by the Fed.
I’m sure some people are smiling at the misfortunes of Bear as they were the only big investment bank NOT to help during the rescue of Long Term Capital Management in 1998
On a sidenote the movie The Pursuit of Happyness about Chris Gardner who goes from being homeless to a top broker got his start at Bear Sterns.