Summary of House of Cards

Bear Stearns’s Fast Fall

March 2008: The historic housing boom had reversed. The bubble hadn’t burst entirely, but signs of trouble loomed. Thornburg Mortgage was beset by margin calls, while Carlyle Group, a private equity firm, hit a rough spot when its residential mortgage-backed securities proved difficult to value as housing prices fell. Those firms were relatively obscure, but Bear Stearns was not. Bear was Wall Street’s fifth-largest securities firm, with a $400 billion balance sheet and a new $1.5 billion headquarters. Its executives were the best-paid people on Wall Street. A hugely profitable titan, feared by its rivals, it was a household name abruptly facing shocking collapse.

Longtime chairman Ace Greenberg had become a cult figure for, among other things, his quirky insistence that staffers recycle paper clips from incoming mail. Bear’s annual Palm Beach media conference drew the heads of Viacom, Disney and NBC Universal. Its failure was nearly unthinkable. But, given Bear Stearns’s heavy exposure to the suddenly collapsing mortgage market, other traders began to whisper about its liquidity crisis. Despite the rumors, or maybe due to them, Bear presented...