Bear Stearns Funds Nearly Wiped Out

Wall Street avoids subprime blues, but outlook bearish
By Sam Gale Rosen,  Newser Staff
Posted Jul 18, 2007 11:08 AM CDT
"Right now things are starting to come unglued," - Charles Gradante, co-founder of the hedge-fund consultant Hennessee Group.   (
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(Newser) – 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.