In March 2008 the investment bank Bear Stearns collapsed after a sudden loss of confidence and a run on its short term funding tied to its exposure to mortgage backed securities. With support from the Federal Reserve, Bear Stearns was sold to JPMorgan Chase at a steep discount to its recent market value, in what is widely seen as an early warning sign of the broader 2008 financial crisis.
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Bear Stearns' near collapse in March 2008, resolved by a Federal Reserve backed sale to JPMorgan Chase, was the first major investment bank casualty of the 2008 financial crisis.
Sources
1. Wikipedia, Bear Stearns
WikipediaFed bailout and sale to JPMorgan Chase sectionQuote, Fed bailout and sale to JPMorgan Chase section
On March 14, 2008, the Federal Reserve Bank of New York (FRBNY) agreed to provide a $25 billion loan to Bear Stearns collateralized by unencumbered assets from Bear Stearns in order to provide Bear Stearns the liquidity for up to 28 days that the market was refusing to provide.
1. Wikipedia, Bear Stearns
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