The Bear Stearns Collapse and Implications in the U.S. Financial Services Industry

This Financial Insights NewsFlash discusses the swift action taken by the Federal Reserve on March 16 to inject liquidity into the U.S. financial services industry. First, it arranged for JPMorgan Chase to acquire Bear Stearns. Second, it made available credit lines to the largest investment banks. These efforts were taken to ensure that despite the collapse of trading markets for some of the most risky investments on their books, financial institutions could continue in their role as trusted financial intermediaries.