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July 5, 2008 6:54:27 PM CDT

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Subprime Woes Rock Another Bear Stearns Fund

Posted Aug 1, 07 5:40 AM CDT in Business,  US    Editor's Choice

(Newser) – Bear Stearns has blocked withdrawals from a mortgage investment fund amid Wall Street jitters over the crisis in high-risk subprime mortgages, the Wall Street Journal reports. Two Bear Stearns hedge funds heavily invested in subprime mortgages collapsed in June, and now another fund, which has only a tiny fraction of its assets in subprimes, is taking a beating.

The Asset-Backed Securities Fund is not threatened, insisted a Bear Stearns spokesman. "The fund is well positioned to wait out the market uncertainty,"  he said. The suspension of withdrawals came as a warning from American Home Mortgage that pressure to repay creditors may force liquidation ignited a sell-off. Its shares plummeted 89%.

Source Wall Street Journal

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Mortgage Crisis

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Bear Stearns Fined $250 Million Over Questionable Trades   (Getty Images)
The logo for Bear Stearns is shown at its corporate headquarters in New York, Wednesday, July 18, 2007. Stocks retreated Wednesday after Bear Stearns Cos. told investors there was little value left in...   (Associated Press)
The headquarters for securities firm Bear Stearns is shown March 16, 2006 in a New York file photo. Bear Stearns Cos., the fifth-biggest U.S. investment bank, said Thursday, June 14, 2007 fiscal second-quarter...   (Associated Press)
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