The Effects of Basel III on Bearsterns

In 2008 Bear sterns and the other banks were allowed to put triple a rated collateralized debt obligations on their balance sheet. From a balance sheet perspective treat them as if they were treasuries So you can ledger you can lever treasuries 30-1. The decline of 15 percent in the CDOs was greater than the entire equity Capitalization so shareholders got wiped out. In the post crisis era in the wake of Bear sterns these banks now have layers of risk risk management They have compliance officers. They have accountants. They have lawyers. They have everybody looking at everything Because why wouldn't they because the risks are so huge?