banks

Investment firm Bear Stearns ran out of money, and the Federal Reserve stepped in to save it from ruin.

Bear Stearns, the smallest of New York's bulge bracket banks, has been the hardest hit by the subprime crisis, and speculation about its balance sheet has been floating for months. Liquidity problems in credit markets have made things worse. This week, worries turned to fears, as rumors made other financial institutions reluctant to do business with the ailing bank. In finance, expectations -- even false ones -- can rapidly become realities: If no one will loan you money or trade with you because your firm might go under, your firm will go under. MORE