SUBMISSION

GRA 65461 Financial Institutions and Crises

Exam component weight: 20% of GRA65461

“Bear Stearns and the Seeds of Its Demise”

The case can be purchased from:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1418914

1. Your case should be neatly typed and structured, and the pages numbered. 

2. Remember that you do not need to retell the case, you need only to cite the facts of the case to the extent they are pertinent to the reasoning behind your analysis and recommendation of the case. 

Learning objectives: 

1. To explore the reasons behind the financial market crisis of 2007-2008. 
2. To get familiar with the process of asset securitization, the creation of CDOs, and credit default swaps. 
3. To understand the role of leverage played in the collapse of the hedge funds and other financial instruments.
4. To assess the role of Bear Stearns’ management in responding to the collapse of the hedge funds and the growing concerns about its own creditworthiness. 
5. To discuss what lessons are offered from the 2007-2008 financial crisis that might prevent future crisis. 

Questions: 

1. In light of the collapse of the hedge funds, how serious were Bear’s credit problems? What steps did management take or could it have taken to address the problem? 

2. Were the steps by Bear’s management adequate in your opinion?