[expabsPapsgag]

piano - bear had/has (the co is still alive afterall) a larger exposure to mbs than lehman and lehman's businesses are definitely more diversified, but the bigger differentiator between the two is lehman's risk management through hedging their exposure, and as you allude to, the larger pool of liquid assets on lehman's balance sheet. in the end, it wasn't bear's mbs exposure that did it in (in fact bear had reached a stable point in that regard following 2 quarters of heavy mark downs - many analysts on the street were looking for decent 1q results), it was its lack of liquid assets. a major fund client had to undo their trades and this triggered a run. lehman used to be as much if not more of a bond shop than bear, but learned about diversifying its business and holding a higher % of liquid assets on its balance sheet in the wake of long term capital. ironic that bear was able to skirt significant exposure to that late 90s blow-up (and in fact declined to help out) and as a result was not forced to learn the lesson that lehman did learn - the very lesson not learned that lead to bear's demise.