Jeremy Siegel on Bear Stearns, the Rate Cuts and Inflation
Episode Description
The ongoing credit crisis in U.S. financial markets has claimed a huge and high-profile victim: Bear Stearns. After being slammed by what amounted to a run on the bank during the week of March 10, the Wall Street firm agreed to be acquired -- for $2 a share -- by JP Morgan Chase over the weekend in a deal overseen by Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Federal Reserve lowered interest rates the same day -- and did so again on March 18, by three-quarters of a percentage point. Are other Wall Street firms likely to follow Bear Stearns into oblivion? Will the Federal Reserve's efforts help to boost confidence in the financial system? Finance professor Jeremy Siegel, author of The Future for Investors, discussed these questions and more with Knowledge@Wharton. 📂 Finance & Accounting
Brief Summary
Bear Stearns collapses, Fed intervenes, markets react to crisis.
Key points
- Bear Sterns' Collapse. Bear Sterns faced a run on the bank and was sold for $2 a share.
- Federal Reserve's Actions. The Fed lowered interest rates to combat the ongoing credit crisis.
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Episode highlights
- Bear Sterns' CollapseBear Sterns faced a run on the bank and was sold for $2 a share.“A tremendous cash squeeze caused the real problem.”3:38Mar 19, 2008
- Federal Reserve's ActionsThe Fed lowered interest rates to combat the ongoing credit crisis.“The Fed is doing everything in its power to keep the situation from developing worse.”9:51Mar 19, 2008
