Bear Stearns said today its profits fell 61 percent to $171.3 million in its fiscal third quarter ended Aug. 31 vs. a year ago, reports Reuters. The investment bank cited bad bets on subprime mortgages and disrupted fixed-income trading.
What happens to Bear Stearns affects folks in Irvine, since it bought the lending operations of subprime player ECC Capital Corp. It also has expanded loan servicing operations in Irvine.
Here’s more from Reuters:
The U.S. investment bank’s profit badly missed the estimates of analysts after the collapse of two hedge funds triggered about $200 million in losses. Industry giant Goldman Sachs Group Inc., meanwhile, thrived where Bear Stearns stumbled, posting a 79 percent gain in profit.
Seen as a leader in packaging home loans into mortgage-backed bonds, Bear Stearns’ bread-and-butter business, fixed-income, saw its revenue plunge 88 percent to $118 million.
“They were definitely hurt by the mortgage problems and credit markets,” said Meg McMullen, president of Boston’s New England Research & Management. “And they are the least diversified among the major investment banks.”
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Treasury Secretary Paulson quits a 30+ million dollar a year job as the Goldman Sachs CEO to take a 150k job as Treasury Secretary…nuff said.