"Bear Stearns was the most aggressive and least diversified investor in mortgage-backed collateralized debt obligations, and the failure of the institution can be traced to an inability to mark to market, or value these securities, after the market for CDOs evaporated in early 2007," the note says. "No one can say what the real market value of Bear Stearns' portfolio will be over time, and this uncertainty led trading partners and investors to move their business out of the firm -- in effect creating a run on the bank. It was this run that finally brought the bank down, not its investment strategy, although its investments and their uncertain valuation were the root of the problem."

Surely the subprime housing market crisis itself and Bear's cash liquidity problems are to blame as well. But both of those factors are enmeshed with the widespread collapse of CDOs and the Bear Stearns hedge funds that invested in them.

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