The tradition at Bear Stearns performed a major position in its positioning vis-à-vis its opponents and should have contributed to its demise. The corporate had a tradition of risk-taking and high-stakes playing, which led to its heavy involvement within the subprime mortgage market. This high-risk tradition brought on Bear to turn out to be overleveraged, resulting in its collapse when the subprime market imploded in 2007.
To keep away from its destiny, Bear might have taken a number of totally different actions within the early 2000s. Firstly, it might have diminished its publicity to the subprime mortgage market, as a substitute of accelerating its presence in that market. This might have diminished the potential for important losses within the occasion of a market downturn. Secondly, the corporate might have been extra clear with its shareholders and buyers about its degree of threat and the potential penalties of its enterprise choices.
Through the summer season of 2007, Bear might have taken motion to cut back its leverage and strengthen its steadiness sheet by elevating capital by means of fairness choices or promoting belongings. This might have helped the corporate climate the market downturn and doubtlessly keep away from collapse.
Through the week of March 10, 2008, Bear might have taken motion to barter a merger or acquisition take care of a bigger and extra financially secure establishment. This might have offered a lifeline and a solution to keep away from the corporate’s downfall.