Bear Stearns told clients yesterday that two of its hedge funds backed heavily by subprime mortgages were close to valueless. The investment bank is putting up $1.6 billion in rescue financing, as Wall Street looks to dump other bonds that have been hit by the subprime downturn as quickly as possible.
Meanwhile, the record-setting market is either oblivious or resilient, the Journal reports, though investors are keeping a sharp eye on the index that tracks the performance of subprime-related bonds. The ABX hit a record low yesterday, and it's unclear just how deep it may dive. "Right now things are starting to come unglued," says a hedge-fund co-founder.