Subprime Woes Rock Another Bear Stearns Fund

Withdrawals blocked, rumors swirl as market slips further
By Peter Fearon,  Newser Staff
Posted Aug 1, 2007 5:40 AM CDT
Subprime Woes Rock Another Bear Stearns Fund
Bear Stearns Fined $250 Million Over Questionable Trades   (Getty Images)

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%. (More Bear Stearns stories.)

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