Bear Stearns Girds for More Losses

Bear Stearns' franchise in particular has been at the center of the credit crunch begun in earnest this summer when a pair of its hedge funds made highly leveraged bets on mortgage securities and CDOs that turned sour.

The fallout from the hedge fund debacle sent the markets into a tailspin that's still being felt.

Bear's chief financial offer said the firm has about $2 billion in mortgage-related exposure that it has significantly tried to reduced. Molinaro said he believes its remaining securities are "marked at levels we think that conservatively reflect conditions in the market."

"It was certainly a rough summer from a reputational franchise," noted Molinaro.

Bear is one of the weakest recent performers among the financials, second to Merrill Lynch, whose severe losses caused the ouster of Stanley O'Neal.

Third-quarter net income for Bear was down 61% to $171.3 million, or $1.16 a share, from the year-earlier period, compared with $438 million for the same period last year.

Bear already took a $200 million loss related to the Bear Stearns Asset Management High-Grade hedge funds. It also booked $700 million in writedowns related to mortgage assets and private equity loan commitments that lost value during the credit crunch.

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