Bear stearns was leveraged, like many others at over 30 to 1, meaning 97.7% of the positions they owned was borrowed money, that basically means a 3.3% decline in the position has wiped your equity out.
I think the consiparcy was by the people who put sub prime loans into a package that was somehow passed off as a high quality securities. That and the 0 down, interest only loans that only worked in a world where home values rise faster than the loan balance.
Goldman Sachs got of 90% of this crap a year before Bear melted down. Nothern Rock in UK had to be bailed out by government.
From what i heard, Bear and the Fed thought it was ok the Friday before, but by sunday morning things had gone bad. I don’t see why there needed to be a conspiracy to show that The Emperor (Bear) had no clothes. This is how these strategies based on leverage implode, 1 day they say they have plenty of liquidity, the next day people don’t return their calls, won’t take the other side in a trade.