Overview: Bear Stearns was a large investment bank, securities trader, and brokerage firm operating globally with headquarters in New York. The firm had been in operation for 85 years when its outsized position in subprime mortgages raised questions from investors, clients, and counterparties about the bank’s balance sheet and the quality of its assets. A failed hedge fund sponsored by a subsidiary of the bank in 2007 had brought unwanted questions about subprime loans in general in an increasingly wary market.
Culture: Bear Stearns had a history of aggressive market behavior. In the early days, Bear was a heavy investor in equities taking advantage of the thriving investment climate in the 1920’s. Trading fell off sharply in the market contraction of the early 1930’s but Bear managed to survive without shrinking the number of staff or eliminating the custom of employee bonuses. The Firm became a leading trader in government securities and corporate bonds taking advantage of the expanded activity in this market being generated by President Roosevelt’s New Deal emphasis on redevelopment of the nation’s infrastructure. Click here to read more…
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