What We Didn’t Learn From the Bear Stearns Collapse
Sifting though the conventional wisdom 10 years later.
Bloomberg, March 19, 2018
This weekend marked the 10th anniversary of the collapse of Bear Stearns Cos. The proximate cause of the disaster was a combination of excessive, subprime mortgage-concentrated leverage and poor risk controls. But the overall economic, monetary and regulatory environment were the broader reasons.
On this anniversary, it is worthwhile to review what happened and what lessons were and were not learned. Let’s begin by looking at some of the broadest factors in effect during the pre-crisis era and how they contributed to the collapse.
Lenders made it easy, especially the non-bank underwriters who were not constrained by either Federal Reserve or Federal Deposit Insurance Corp. rules and regulations. Speaking of which . . .
Continues at: What We Didn’t Learn From the Bear Stearns Collapse