Bear Stearns was an investment bank based in New York city. It collapsed during the sub prime crisis of 2008
It was founded in 1923 and survived the stock market crash of 1929
It was one of the world’s largest investment banks
it had a market capitalisation of $20 billion
It operated a wide range of financial services including hedge funds which used collateralised debt obligations to leverage profit
It was thus heavily exposed when the housing market collapsed in April 2007
The Bear Stearns hedge funds posted massive losses and write-downs. The firm had illiquid assets in a falling market .
In March 2008 the company went to the Federal reserve for a credit guarantee but another downgrade hit the firm and a bank run started. This was the end
Bear Stearns was sold to JP Morgan Chase who were lent the money by the Fed. JP Morgan then paid several billions to close the falling trades and settle litigation.
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