Bear Stearns ( BSC) executives say the worst is over, but the New York-based firm is far from out of the woods. Executives speaking at Bear's investor day said the firm doesn't need an equity infusion, despite abundant rumors to the contrary. They said Bear's fourth quarter should look better than its hard-hit third quarter, which isn't hard to believe. All that said, investors mustn't overlook the dour big picture confronting the brokerage firm. Bear and all the big financial institutions will be facing a shrinking mortgage business and slowing economic environment -- perhaps for years to come. That prospect is bad for everyone, but for Bear it's a bigger problem because the mortgage business became such a significant revenue driver. Bear has been the nation's second largest underwriter of mortgage-backed securities. Between 2002 and 2006, revenue from mortgage debt accounted for more than 21% of the company's $4.3 billion in revenue growth, according to a Bloomberg report. A storm of tightening credit and escalating mortgage defaults has resulted in huge losses at some of the nation's largest financial institutions, including UBS ( UBS) and Lehman Brothers ( LEH). So far, Bear has seen more financial pain than its peers. Earnings cratered 61% from a year ago in the third quarter. And its diminutive size -- Bear has a market capitalization of roughly $18 billion, compared to $33.3 billion at Lehman -- and lack of a significant international exposure haven't helped.