Bear Stearns CEO: No Liquidity Crisis for Firm
Three days before announcing that Bear Stearns' financial situation had substantially worsenend, chief executive Alan Schwartz told CNBC he is not aware of any imminent threat to the Wall Street investment bank's liquidity.
In an exclusive interview with CNBC's "Squawk On the Street" on Tuesday, Schwartz refuted market rumors about a cash crunch at Bear Stearns that had knocked its stock down sharply. Schartz said he didn't know where the rumors originated.
"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.