Bear Stearns Research Paper

ptember 2017

The New York Investment firm, Bear Stearns, started in 1923 and was one of several that made it through the great depression and other recessions. Although Bear Stearns failed during the largest financial crisis in the United States, it sure did hold its ground for the time it existed. It dealt with mostly investment banking, equities and bonds, but also did mergers and aquisitions, corporate finance, private customers banking, foreign exchange sales and trading, and more. It didn’t just stay afloat during the recessions, it became one of the top investment banks in the United States. It served major corporations, capital markets, other businesses, types of government and even individuals. Bear Stearns and other large investment

They also deal with trading and securities, so the money keeps flowing when these investment banks are in business. In March of 2008, when the fall of the financial crisis was in full swing, something had to be done, otherwise the crisis would have become a much larger problem than it already was. It was necessary to have the government step in underneath J.P. Morgan, who essentially bought Bear Stearns. They had a responsibility of preventing the mess from getting any bigger and also recognizing the huge gap and problem they needed to have resolutions for in the future. The government went on to create plans of action if the financial markets ever were to all come this close again to failing. When rumor or some trading changes, the markets change overnight (literally) and there isn’t much more that needs to happen for everyone else to get scared and want to sell; therefore, crashing markets and the

What would have been different if Bear Stearns was allowed to fail? Who did it help to have the government step in and help out Bear Stearns and should have Bear Stearns been allowed to fail? These questions are quite controversial because there are arguments for helping Bear Stearns and also the side that is against the “bail out”. The people that would have been most affected if Bear Stearns were allowed to go bankrupt would have to be the people that had retirement funds that were held there and then other huge hedge funds. They were a clearing firm and dealt as the middleman between companies. The money that was actually held there and people needed, such as retirees, would have not been able to access their money. There would have been a huge legal side to the bankruptcy because the money would be gone, and people would have needed their money. The government would have had to step in regardless in a situation like that would have been significantly more of a mess to clear up. The government clearly wanted to avoid that mess by stepping up to fund J.P. Morgan as collateral instead. There was no way to avoid a problem, but this was the “lesser of two evils” because of the legality