1. Failure Analysis:
Identify the major factors that contributed to Bear Stearns’s failure? Who stood to benefit from its implosion? How did Bear Stearns’s collapse differ from the ‘Long Term Capital Management’ failure a decade earlier? What could Bear Stearns have done differently to avoid this fate?
In the early 2000’s?
And during the summer of 2007?
And during the week of March 10, 2008?
(1) Identify the major factors that contributed to Bear Stearns’s failure? Bear’s somewhat cutthroat and renegade culture of maverick may have contributed a lot to their failure. This culture somehow made it killed by the credit crisis, while other …show more content…
Is perception of Liquidity more important for a banking/investment banking firm than manufacturing firms (such as Ford or Boeing)? Why? What could Bear Stearns have done to address its Liquidity concerns, which initiated the run on the bank? Looking back, what lessons can we infer from Bear Stearns’s failure regarding the business model of investment banks? Looking forward is the concept of ‘pure-play’ investment banks sustainable?
(1) What’s the role of liquidity for banking and investing banking firms? Liquidity can reveal the untrue existence of cash (and cash equivalents), short-term investments, accounts receivable and accounts payable, etc. To which extent it lives up to the real condition. It measures whether the bank’s business is legal, reasonable and whether the financial status is promptly and properly reflected on the financial reports. Liquidity risk is also important. It values the repayment of debt and reminds the board of the corporation’s risk at any time. Managing liquidity is a daily process requiring bankers to monitor and project cash flows to ensure that adequate liquidity is maintained. The investment portfolio serves as the primary source of liquidity and represents a smaller portion of assets. Investment securities can be liquidated to satisfy deposit withdrawals and increased loan demand.
(2) Is perception of Liquidity more important for a banking/investment banking firm than manufacturing firms (such as