Mortgage Industry

Because the structure of the mortgage industry was rapidly changing, it could not be easy to identify the changes taking place unless a bank could invest heavily in market research. According to Kelly (2010) Bears just like the other investment banks specialised in offering mortgages concentrated in giving out loans other than studying the market to ensure they can easily predict what may be happening in the near future. This is what made them to be left stuck in the crisis while other banks were at least fair off.

If at all it could not invest in market research it could have at least tried to avoid the risks considerably. Bamber & Spencer (2008) argue that one of the best options could be to sell the various tranches of the securities in the mortgage bond market. It had several incentives that could easily shift most of the loans impact to third parties.

With the collapse of the northeast US corridor, California, Arizona and Florida housing markets most of the risk-averse lenders reduced or completely stopped lending new loans. Bears should also have taken the same action, rather than keeping on with the issuance of new loans; however, this may be partially an attribute to their staffing methods.

Bear Stearns was known for recruiting and retention practices that were distinct among Wall Street firms. Rather than looking for Ivy League undergraduate and MBA degrees, former CEO Alan Greenberg described the firm’s ideal candidate as Poor and Smart with a Desire to be rich. “We are really looking for people with PSD degrees,” he said.

JPMorgan was in almost every respect divergent. A product of the combination of many other companies, its culture had been in constant flux throughout its history. An important element of JPMorgan’s success was its ability to successfully and efficiently integrate acquired employees, whose Ivy-league pedigrees were a matter of pride, into its culture of emotional positivity, respect,