Rumors Caused Bear Stearns Collapse, CEO Says

Law360, New York (April 3, 2008, 12:00 AM EDT) -- The collapse of Bear Stearns Cos. Inc. was not caused by a shortage of liquidity or capital but by unfounded rumors that led to a lack of confidence in the company, the investment bank's CEO, Alan D. Schwartz, said Thursday.

At a hearing of the U.S. Senate Committee on Banking, Housing and Urban Affairs, Schwartz testified that as the rumors of a liquidity crisis spread, customers, counterparties and lenders began refusing to do business with Bear Stearns. As a result, liquidity at the company allegedly fell...
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