Bear Stearns Girds for More Losses
Bear Stearns (BSC) expects to take a $1.2 billion writedown related to its exposure to mortgage-related securities in the fourth quarter, but said its leveraged finance business is getting better.
The writedowns are linked to the liquidation of Bear's warehouse of collateralized debt obligations and other subprime mortgages, whose prices have been crushed in the market over the past two months.
However, Bear has cut its exposure to CDOs by more than half since the end of August, to $884 million, and its long position in domestic subprime mortgages has been eliminated. That apparently led investors to believe Bear has gotten a handle on the biggest of its problems, and they sent its shares up 6.1% to $107 in premarket trading.
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