|其他題名:||Too Big to Fall：Bear Stearns|
Too Big to Fall
The report describes that the Bear Stearns Bank nearly went to the bankruptcy in 2008. Credit crunch at first prevented the potential lender to get the loan, and also highly leveraged was another element that caused the problem of solvent and bank run, so that Bear Stearns had difficulties obtaining funds, resulting in financial panic. But the last straw that breaks the camel’ s back was that Bear Stearns’ hedge funds based on mortgage-backed securities were written down the value because of huge losses. The company's working capital was also underfunded, and Bear Stearns was on the verge of bankruptcy. We searched information online to find out the whole story of the Bear Stearns, and discussed with every group member about the background of each financial event. When Bear Stearns was on the verge of bankruptcy, as it should be, the government couldn’t sit on his hand, because Bear Stearns took over a large number of customer’s assets. If Bear Stearns had collapsed, the financial system would have been hung in the balance. In other words, was the so-called "too big to fall". Fed used the indirect way to finance, so that JP Morgan could acquire Bear Stearns. However, the moral hazard also came out; the Government let taxpayers take the risks in order to rescue Bear Stearns. Therefore, financial institutions should learn a lesson from the Bear Stearns; government wouldn’t help in every crisis. Those institutions should do the risk spreading for the sake of preventing from crisis happened.
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