Bear Stearns Makes $1 Billion Bet on Continued Subprime Woes

One of the firms most heavily involved in this businesses of packaging and reselling subprime mortgage-backed securities was Bear Stearns, then the fifth-largest. earlier settlement offers were as.

BTW, great call Cooper on your Bear Stearns puts. Deal just announced, values BSC at $2! That’s $250 million for the whole business, INCLUDING the $1.2 BILLION office building. Think of poor Joe Lewis, who put in $1 BILLION (it’s worth about $30K now – ouch)!!

Mr. Paulson bet big against subprime mortgages ahead of last decade’s financial crisis, earning about $15 billion of profits for his funds and approximately $4 billion for himself. He deferred the bulk of the taxes on these profits, using a tax provision available at the time to hedge-fund managers, said the people close to.

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Thus one chief executive, recounting his investment firm’s decision to spurn an offer of securities backed by subprime (low-quality) mortgages from Bear Stearns, a large investment bank.

mount across the industry, Bear Stearns signed a merger agreement with JP Morgan Chase involving a stock swap for a paltry $2 a share, a decline of 99 percent from the stock’s peak price just over 14 months earlier.1 This rep-resented a deterioration of almost $20 billion in market capitalization resulting from the company’s bets on the housing market and markets for subprime mortgage-

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6 mins read. Liquidity Risk management: Bear Stearns Liquidity crisis Case Study: The Liquidity Run cycle. When property values began to plummet in 2006-2007, subprime mortgage payers defaulted on their payments which initiated a chain reaction whereby there was a significant drop in the cash inflows from these mortgages which would have been used to pay off the obligations on the derivate.

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Why Buffett Will Never Buy GE & Economist Dr. Lacy Hunt Yet they continued to buy these mortgages and throw. The government took on most of the rest, in order to make the acquisitions happen. Chase got to buy Bear Stearns with $29 billion in Fed.

In other words, the risky, nearly worthless $30 billion in assets that were bogging down Bear Stearns have been handed to you and me. If somehow these securities end up being worth something we profit. If not, which is what the market is currently saying, all of the liability (except for $1 billion.