Merrill Lynches Bear?

Now the fun really starts. This could get very ugly, very quickly; forget Bear Stearns (BSC), which has very little (about $40 million of friends' and family money) of its own skin in this game. The big issue is what happens when the whole world reprices its CDO and RMBS (residential mortgage-backed securities) basis forced liquidation.

Two Big Funds At Bear Stearns Face Shutdown [$$]
by Kate Kelly, Serena Ng and David Reilly
The Wall Street Journal Jun. 20 2007

...These CDOs [collateralized debt obligations] are probably marked 30 percent higher than where they should be," he said.

Already, Highland Financial Holdings Group's $125 million Special Opportunities Fund has decided to shut down after a disastrous series of bets in mortgage bonds. Sources told The Post that the fund dropped over 20 percent...

Subprime Street Is Feeling The Heat
by Roddy Boyd
The New York Post Jun. 20 2007

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[EARLIER] This one still has moving parts, but the meejuh consensus Tuesday night was that Merrill Lynch (MER) —after earlier wavering on whether it would sell collateral held against its loans to the Bear Stearns High-Grade Structured Credit Equities Enhanced Leverage Fund—is taking bids.