Bear Stearns Collapse Timeline
The collapse of Bear Stearns: Five years on
David Thomas
19 Mar 2013
This week five years ago, JP Morgan announced it would buy Wall Street rival Bear Stearns in a deal worth $2 a share – this ultimately rose to $10. Here, Financial News looks at the events in the run-up to the fall of the 85-year old independent investment bank.
Financial News compiled the timeline from press releases, contemporary media reports and William D Cohan’s account of the collapse of the bank, ‘House of Cards’.
May 21, 2007
After months of growing instability in the US sub-prime mortgage market, Bear Stearns chairman Alan ‘Ace’ Greenberg offers reassurances that the firm, heavily exposed to the market, is on top of things. “The sub-prime (issue) has been blown completely out of proportion,” he says, in comments reported by Dow Jones Newswires.
Mid-June 2007
Serious problems become apparent at two Bear Sterns hedge funds with a high exposure to sub-prime mortgages. Investors in the High-Grade Structured Credit Strategies Enhanced Leverage Fund, which managed $600m, are informed that the fund has lost 23% of its value over the year to April, reports The Wall Street Journal. The fund begins a fire-sale to minimise exposures.
June 22, 2007
After the failure of a mooted rescue plan involving support from lenders, a new rescue scheme is announced by Bear Stearns, which offers $3.2bn for a bailout of a second fund - the High Grade Structured Credit Fund. The bank previously had only $45m invested in this fund’s equity, according to William D Cohan in House of Cards’. Bear Stearns later says it is providing $1.6bn to the fund rather than the original $3.2bn, citing the sale of assets. A decision is made not to rescue the High-Grade Structured Credit Strategies Enhanced Leverage Fund, according to Cohan.
August 3, 2007
Standard & Poor’s downgrades the bank’s outlook to negative. The bank says that concerns over its situation are “unwarranted” as the hedge fund fallout
David Thomas
19 Mar 2013
This week five years ago, JP Morgan announced it would buy Wall Street rival Bear Stearns in a deal worth $2 a share – this ultimately rose to $10. Here, Financial News looks at the events in the run-up to the fall of the 85-year old independent investment bank.
Financial News compiled the timeline from press releases, contemporary media reports and William D Cohan’s account of the collapse of the bank, ‘House of Cards’.
May 21, 2007
After months of growing instability in the US sub-prime mortgage market, Bear Stearns chairman Alan ‘Ace’ Greenberg offers reassurances that the firm, heavily exposed to the market, is on top of things. “The sub-prime (issue) has been blown completely out of proportion,” he says, in comments reported by Dow Jones Newswires.
Mid-June 2007
Serious problems become apparent at two Bear Sterns hedge funds with a high exposure to sub-prime mortgages. Investors in the High-Grade Structured Credit Strategies Enhanced Leverage Fund, which managed $600m, are informed that the fund has lost 23% of its value over the year to April, reports The Wall Street Journal. The fund begins a fire-sale to minimise exposures.
June 22, 2007
After the failure of a mooted rescue plan involving support from lenders, a new rescue scheme is announced by Bear Stearns, which offers $3.2bn for a bailout of a second fund - the High Grade Structured Credit Fund. The bank previously had only $45m invested in this fund’s equity, according to William D Cohan in House of Cards’. Bear Stearns later says it is providing $1.6bn to the fund rather than the original $3.2bn, citing the sale of assets. A decision is made not to rescue the High-Grade Structured Credit Strategies Enhanced Leverage Fund, according to Cohan.
August 3, 2007
Standard & Poor’s downgrades the bank’s outlook to negative. The bank says that concerns over its situation are “unwarranted” as the hedge fund fallout