The case highlights that the firm had developed the reputation as a maverick in the investment banking in New York in its early years itself. Bear Sterns had always focused on being different from what the other players in the market were doing. At the start when others companies in the industry were earning from equity underwriting and advisory services, the firm focused on bond trading.
Later the company invested several products such as Long Term Capital Management (LTCM) and Bear Sterns Asset Management (BSAM). The two key aspects of these two funds are that these may have higher returns but also are associated with high risk. Further the firm continues to invest in these funds by increasing the leverage (Burrough, 2008). In both the cases high risk was taken by the bank resulting in huge losses.
Lastly, the bank used to hire people who were smart and had desire to become rich. This clearly led to development of strategies, products and actions that resulted in excessive risk. The three aspects that have been highlighted above clearly show the role of and inclination of the culture at Bear Stearns. As a result of this culture
Everything was secondary for maximizing the profitability
Lack of responsibility of the senior management to protect the interest of shareholders
Excessive risk taken by the financial bank
It can be said that such culture at Bear Stearns did help the bank in its positioning vis-à-vis its competitors. For example, the products of the bank always had different attributes whether it was the start of the business and trading in government securities to last through the Great Depression and moving onto the LTCM which was based on profoundly complex computer models assisting in pricing securities according to risk more accurately than the rest of the market thereby gaining from the divergence in price between long-term U.S. Treasurybonds. However, such culture also led to the downfall of the bank as certain decisions were taken that was not good for the bank. For example, the excessive leverage was employed by the bank when other banks were withdrawing the investment from the mortgage based funds.