Bear Stearns collapsed in March 2008 and helped signal the worsening mortgage crisis.
Bear Stearns faced a severe liquidity crisis after investors lost confidence in its exposure to mortgage-related securities. JPMorgan Chase agreed to acquire the firm in a government-supported deal announced on March 16, 2008. The Federal Reserve provided emergency financing through an arrangement that helped prevent an immediate disorderly failure.
The rescue was an early major warning that losses in the U.S. housing market threatened the broader financial system. Later that year, Lehman Brothers filed for bankruptcy, while the U.S. government rescued insurer AIG and supported other stabilization measures.
Bear Stearns and Lehman Brothers are often mixed up because both were major investment banks at the center of the crisis. Bear Stearns was acquired before it could enter bankruptcy; Lehman’s failure came later and became the more dramatic event.