Schwartz made similar comments to CNBC on Tuesday, when Bear's stock was tanking on market rumors. Schwartz said then that there were no imminent threats to the Wall Street investment bank's liquidity despite rumors to the contrary.
"Part of the problem," he said in Tuesday's interview, "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." Watch the full interview at left.
Bear Stearns, the fifth-largest U.S. investment bank, has more exposure to the U.S. bond markets than its competitors, and has a large mortgage-backed securities business.
Standard & Poor's said on Thursday that subprime mortgage-related write-downs are likely more than halfway done, but more write-downs in other areas--including prime mortgages--are still possible.
The Wall Street Journal reported on Thursday that some clients are increasingly reluctant to trade with Bear Stearns, and that hedge funds are moving assets away from the investment
bank's prime brokerage.
Financial market traders across London have been told by their firms to stop dealing with Bear Stearns, sources in several dealing rooms told Reuters.
At least six major institutions in London -- including Commerzbank, Royal Bank of Scotland and JPMorgan -- had stopped giving prices to the U.S. bank, a credit trader at one European institution in London, who declined to be identified, said.
"The situation is very much that Bear Stearns was very close to the edge and it was much worse than we all thought," said Michael Klawitter, currency strategist at Dresdner
"It raises severe concerns over other banks. (Bear Stearns) wasn't a small bank, it was the second largest underwriter of mortgages last year. For the situation to deteriorate in that
way is not good news and it will add further to jitters," he added.