Bear Stearns Hammered

Updated from 4:26 p.m.

It is looking like a bear of a summer for Bear Stearns (BSC Quote) hedge fund manager Ralph Cioffi.

Wall Street learned Tuesday just how bad the carnage is in two of Cioffi's funds, a month after they nearly collapsed under the weight of bad bets on the swooning subprime mortgage business. The two funds chock full of esoteric securities -- High-Grade Structured Credit Strategies Fund and its sister vehicle, High Grade Structured Credit Enhanced Leveraged Fund -- are now worth less than 10 cents on the dollar, according to media reports.

Sources say investors had been expecting a recovery of around 50 cents on the dollar for the less leveraged fund. Bear shares fell almost 3% in after-hours trading.

The credit markets and parts of the stock market -- particularly Bear's own shares, which are down nearly 20% this year -- have already felt subprime pain. The fear in some quarters is that Bear's pain could have a cascading effect that forces hedge funds and others on Wall Street to offload hard-to-sell assets in a fire sale.

Stock-market bears say such a fire sale could force some selling of all types of securities -- which could lead to a ratcheting up of lending standards and reduce the liquidity that's been such a boon to the stock market.