Bear Stearns, already forced to shut two hedge funds hit by US subprime mortgage-related losses, is now facing big losses in a third fund that has about $900m in mortgage investments but only limited exposure to the subprime mortgage market, reports the Wall Street Journal. Bear has halted redemptions from its Asset-Backed Securities Fund but denied plans to shut down the fund. Unlike the other two Bear funds, the ABS fund borrowed no capital and had only limited exposure to subprime mortgages, says the Journal, warning, however, that the fund could be eventually forced out of business.
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