Report: 3rd Bear Stearns fund in jeopardy

[NeoConsSuck]

Source: CNN.COM

NEW YORK (CNNMoney.com) -- A Bear Stearns' hedge fund with about $900 million in mortgage investments is reportedly facing huge losses and is refusing to return investors' money, according to a news report published online Tuesday.

Revelations of the imperiled hedge fund comes weeks after the investment bank closed two hedge funds that suffered losses arising from the subprime-mortgage market

The value of the Bear Stearns Asset-Backed Securities Fund has fallen amid a flurry of mortgage markdowns, the Wall Street Journal reported, sparking fears the bank will have to close the fund as it has done to two others.

Bear Stearns (Charts, Fortune 500) has delayed paying back investors' money in the hope that the values of the fund would rise again, a source told the Journal.



Read more: http://money.cnn.com/2007/07/31/news/companies/bear_stearns/index.htm?postversion=2007073118

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Wonder how Wall Street is going to react to this bit of news tomorrow?

[Demeter]

1. With All The Panic and Despair It's Entitled To!

The party's over, it's time to call it a day!

[AX10]

2. Those with money in hedge funds (the wealthy of course)...

will feel alot of hurt now. Smart investors would have rid themselves of these investments in the Winter. The shit is going to hit the fan now. I am expecting to see many more hedge funds go up in smoke by years end.

[Xipe Totec]

4. The myth of the smart investor

every transaction has two parties; you can't sell if nobody buys, and you can't buy if nobody sells.

in every transaction, regardless of whether you buy or sell, there's always a winner and there's always a chump.

[Journeyman]

5. Or, for every "killing" in the market. . .

someone's left "dead."

[Xipe Totec]

6. There you go!

:thumbsup:

[pokercat999]

11. A lot like poker.

[Xipe Totec]

13. Zero-sum game. Exactly. nt

[GainesT1958]

7. Expect more of these "sub-prime" lenders...

To go belly-up within the next six months or so. Many of the ARMs (adjustable-rate mortgages) which were sooo popular during the last ten years (and especially during the past five) have gone higher and higher during the past 1 1/2 years, and the incomes of the mortgagees aren't keeping up--but their costs of living are rising along with the rates. Hence, there are more late payments and more foreclosures, leaving sub-prime lenders holding the bag.

This affects not only the housing market (which of course has been tanking in most markets for the past two years, and even in "hot" markets like the one here--Wilmington, NC--for the past year) but sends a ripple effect through the economy for the broader implications it has. Watch for more people to take their money out of hedge funds which include even some sub-prime lenders really fast over the next few days, and next few weeks. Even major bankcorp stocks--those NOT specializing in sub-prime lending--could be affected by this.

Whenever an economic "expansion" is built on debt, as this latest one has been, it usually has a hard landing when it tanks. Many of us here at DU have forecast such a landing for some time; I think right now we're seeing the first signs of what we've expected.

The only thing the Repubs had going, ostensibly, in their favor was a growing economy. Now even that's shriveling up. Their fine field of candidates (heavy snark) need to learn from Poppy Bush what it's like to try and run defensively during a recession. When you don't have any credibility worth talking about to begin with, an economic downturn isn't exactly going to rub off positively on you!:eyes:

B-)

[MidwestTransplant]

3. I think the rumors hit by the end of the day.

[aquart]

8. These people have been criminals a very long time.

37 million dollar settlement for one set of crimes. And it wasn't the beginning of enough.

[NashVegas]

9. I Guess I'm Supposed to Feel Like This Is a Tragedy ...

But these people were planning on getting a payoff from others who were buying more house than they could afford, egged on by real estate brokers and lenders who did everything they could to help convince those buyers that a home that cost 3x, 4x, 5x their income was within their reach.

[AndyTiedye]

10. Putting the BEAR in Bear Stearns

[Eurobabe]

12. It's even affecting a Lender(s) in Germany, IKB

US sub-prime crisis claims German victim

FRANKFURT: The US sub-prime mortgage crisis claimed lender IKB as a first victim in Germany yesterday, triggering sharp falls in other German bank shares on fears that they, too, could face sudden problems.

Small-company lender IKB surprised markets with a profit warning linked to problems in the US sub-prime market and announced that its chief executive had stepped down, sending its share price down more than one fifth.

http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=164121&version=1&template_id=48&parent_id=28

[lapfog_1]

14. This one is worse..

http://money.cnn.com/2007/07/31/news/companies/american_home.reut/index.htm?postversion=2007073117

American Home Mortgage holds 2.5 percent of the entire mortgage market. They are the first non "sub-prime" lender to face bankruptcy.

The long expected "bubble burst" in the housing market is here.

Its going to get really bad for home owners that thought they had made a lot of money in the last few years.