CS3 - Bear Stearns and the Seeds of its Demise. Accounting Essay

Student’s Name:
Professor’s Name:
Course:
Date:
Bear Stearns and The Seeds of Its Demise
The financial turbulence in summer 2007 is accounted for by a lack of confidence. Uncertainties on valuations and handling the risk crisis overwhelmed the need to overcome the crisis like Bear Stearns did before. It conquered a great depression in its history but ended up succumbing to a great recession. Financial imbalances in handling mortgage loans during the risk-taking period exposed the company considering its history in investment banking. Investors lacked confidence in the firm due to spreading rumors after the two subprime hedge funds, which ruined the company’s reputation (Chaplinsky, 10). The transparency of assets had become vague with the little or no documentation of the subprime loans that raised the alarm. The liquidity of the firm decreased, leading to the sale of the company at a cheaper value as it almost collapsed due to losses.
The subprime mortgage crisis was responsible for th...