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Financial Crisis Inquiry Report, Authorized Edition by Financial Crisis Inquiry Commission

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15
MARCH 2008: THE FALL OF BEAR STEARNS
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After its hedge funds failed in July 2007, Bear Stearns faced more challenges in the second half of the year. Taking out the repo lenders to the High-Grade Fund brought nearly $ 1.6 billion in subprime assets onto Bear’s books, contributing to a $1.9 billion write-down on mortgage-related assets in November. That prompted investors to scrutinize Bear Stearns’s finances. Over the fall, Bear’s repo lenders—mostly money market mutual funds—increasingly required Bear to post more collateral and pay higher interest rates. Then, in just one week in March 2008, a run by these lenders, hedge fund customers, and ...

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