Bear Stearns Funds Nearly Wiped Out

Bear Stearns told clients yesterday that two of its hedge funds backed heavily by subprime mortgages were close to valueless. The investment bank is putting up $1.6 billion in rescue financing, as Wall Street looks to dump other bonds that have been hit by the subprime downturn as quickly as possible.

Meanwhile, the record-setting market is either oblivious or resilient, the Journal reports, though investors are keeping a sharp eye on the index that tracks the performance of subprime-related bonds. The ABX hit a record low yesterday, and it's unclear just how deep it may dive. "Right now things are starting to come unglued," says a hedge-fund co-founder. (More subprime mortgages stories.)