Bear Sterns had $11.1 billion in equity covering $395 billion in assets, i.e., they were leveraged 35.5 to 1 in early 2006. A 5% drop in the value of their assets would wipe out their equity forcing the bank into insolvency. wipe out their debt forcing the bank into insolvency. wipe out their cash reserves forcing the bank into insolvency. have no impact on their bottom line. O