Housing Market Tracker - Subprime Takes Out Bear Stearns
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bear stearns, housing market, subprime March 18th, 2008Quotes of the Day
“It is a serious extension of putting the Federal Reserve’s balance sheet in harm’s way. That’s got to tell you the economy is in a pretty precarious state.” - Vincent Reinhart, former director of the Division of Monetary Affairs at the Fed and now a scholar at the American Enterprise Institute in Washington. Over the weekend, the Fed cut the discount rate on direct loans to banks to 3.25% and became lender of last resort to the 20 firms that buy Treasury securities directly from it. (Bloomberg, Mar. 17th)
“The public has never fully understood how leveraged these institutions are. But the market makers understand this inherent risk. This is a run on the bank, just like Long-Term Capital Management, Kidder and Drexel Burnham.” - Samuel L. Hayes, a professor of investment banking at Harvard Business School, who says Bear Stearns borrowed more than 30 times the value of its [then] $11 billion equity base. (NY Times, Mar. 15th)
Subprime Fallout
Tags: bear stearns, housing market, subprime
