The Down and Dirty Details of Bear's Demise

Bloomberg today has a provocative article on the real causes of Bear Stearns demise, drawing from an unexpurgated version of an SEC report that was posted on the website of Sen. Charles Grassley.

The SEC had, for some murky reason, removed significant details from the report it had released earlier. The unedited version sat on Grassley's website, unnoticed, until the BBerg reporters picked it up.

Here are some of the salient details not previously disclosed, according to Bloomberg:

Bear Stearns traders used pricing models for mortgage securities that "rarely mentioned'" default risk.

The firm lost one of its top modelers "precisely when the subprime crisis was beginning to hit'' and writedowns were being taken, the full report said. "As a result, mortgage modeling by risk managers floundered for many months,'' according to the unedited document, quoting internal SEC memos from April and December 2007. The comments were removed from the edited version publicly released by the SEC.