Bear (Stearns) Story

The collapse of Bears Sterns on the weekend of March 14th 2008 was unprecedented in the history of Wall Street. As an observer myself, the zig-zagging of BSC's stock price around that time was quite unnerving. I have always wondered about the details of the collapse. The Wall Street Journal had a 3-piece report on it couple of weeks ago but I don't think it did a good job at identifying the critical events. The Vanity Fair article does that, and it boils down to 2 words "novation" and "repos".

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Bringing Down Bear Stearns
Vanity Fair, August 2008
Bryan Burrough

On Monday, March 10, the rumor started: Bear Stearns was having liquidity problems. In fact, the maverick investment bank had around $18 billion in cash reserves. But soon the speculation created its own reality, and the race was on to keep Bear’s crisis from ravaging Wall Street. With the blow-by-blow from insiders, Bryan Burrough follows the players—Bear’s stunned executives, trigger-happy reporters at CNBC, a nervous Fed, a shadowy group of short-sellers—in what some believe was the greatest financial scandal in history.(>>>...)