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Bear Stearns CEO:  No Liquidity Crisis for Firm

Andrew Fisher
Wednesday, 12 Mar 2008 | 10:12 AM ET

The chief executive of Bear Stearns told CNBC that despite recent market volatility, he is not aware of any imminent threat to the Wall Street investment bank's liquidity.

Market rumors about a cash crunch at Bear Stearns have driven the bank's stock down sharply in the last week, but Alan Schwartz insists the company continues to trade with its counterparties.

In an exclusive interview with CNBC's "Squawk On the Street," Alan Schwartz said he does not know where the rumors originated.

Bear Stearns Recap
Highlights from his discussion with Bear Stearns CEO Alan Schwartz, with CNBC's David Faber

"Part of the problem is that when speculation starts in a market that has a lot of emotion in it, and people are concerned about the volatility, then people will sell first and ask questions later, and that creates its own momentum," he said.

Bear Stearns was given a boost this week when Securities and Exchange Commission Chairman Christopher Cox said his regulatory agency is comfortable with the 'capital cushions' at the nation's five largest investment banks.

Schwartz says he has numbers to back up his insistence that the bank's position is solid.

"We finished the year, and we reported that we had $17 billion of cash sitting at the bank's parent company as a liquidity cushion," he said. "As the year has gone on, that liquidity cushion has been virtually unchanged."

Last summer, two Bear Stearns hedge funds collapsed, in large part because of their huge weighting in subprime mortgages. The collapses were blamed for triggering the worldwide freeze in credit markets and have continued to hold down the investment bank's profitability.

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