24/7 Wall St.

Bear Stearns (BSC) trades at $121 now, down from almost $173 earlier this year. And, it will be below $100 by Labor Day. The disintegration of two of its funds with large positions in mortgage securities have brought it down this far. The Wall Street Journal is now reporting that the bank is keeping  "investors from taking their money from another fund that put about $850 million into mortgage investments."

But, that is not Bear Streans’ worst problem. It has loans out to American Home Mortgage (AHM). That company’s stock dropped 88% yesterday as it indicated it might have to go into liquidation. It can’t get the money to cover its dividend and preferred stock obligations.

That is what the market knows about Bear Stearns today. But, a new shoe drops almost daily. At first, Wall St. hoped the problems at the financial firm were just in the first two funds that failed. Now, there are two more problems–a third Bear fund and its loans to AHM. Is that the end of it? Probably not.

Should Bear Stearns’ shares drop to $100? Maybe not, but a frightened market will take it that way. The stock traded there two years ago before M&A, proprietary trading, and private equity lifted the shares of all the investment banks.

So, why not a little retracing?

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.