Both firms carried hard-to-value mortgage inventories on balance sheets dependent on secured wholesale funding. Bear failed through a rapid liquidity run; Lehman survived six more months, raised capital and reduced reported leverage, yet still became unfinanceable.
Bear estimated available liquidity of about $18.3 billion on March 10, 2008 and no more than $4.8 billion by March 14, while facing $60–$100 billion of potential funding requirements if repo counterparties did not renew.
Gross leverage fell from 31.7× in fiscal Q1 2008 to 21.1× in preliminary Q3; net leverage fell from 15.4× to 10.6×. The firm filed Chapter 11 five days after announcing its preliminary Q3 results.
| Stage | Bear Stearns | Lehman Brothers | What it tells us |
|---|---|---|---|
| Asset damage | Mortgage marks and hedge-fund losses weakened 2007 earnings. | Residential and commercial real-estate marks accelerated in Q2–Q3 2008. | Earnings damage narrows the confidence buffer. |
| Funding sensitivity | Heavy reliance on repo and secured lending. | Large dealer balance sheet dependent on wholesale collateralized funding. | Short maturity makes confidence a state variable. |
| Last reported liquidity | $17.3B at fiscal Q1 2008; later collapsed in days. | $42B in preliminary Q3 disclosure. | Headline liquidity is not the same as durable liquidity. |
| Outcome | Emergency sale to JPMorgan with official support. | Chapter 11 filing on September 15, 2008. | Resolution capacity can change the outcome even when vulnerabilities rhyme. |
Daily liquidity outflows, repo maturity, haircuts, collateral eligibility and concentration by counterparty.
Level 3 assets relative to tangible capital, exposure concentration, marks and realized-sale evidence.
Separate voluntary risk reduction from forced sales, write-down-driven balance-sheet contraction and emergency capital.
Guarantees, novations, client withdrawals and the availability of a credible buyer or public backstop.