Hard to lose...

...why anyone would have bought BS shares (or provided capital in another manner as we have seen from sovereign wealth funds) without waiting to see what "ballpark" the legal liability would be is beyond my feeble powers of reasoning.

As I have said here before, this is just the beginning, and if it comes out that BS's prop desks benefited from the collapse...that would be very bad indeed.

I also have some anecdotal evidence that Bear is "nickel and diming" its customers at the moment...presumably in order to scrape every last bit of earnings it can to shine up the vehicle prior to selling (another) portion.

Feds Claw At Bear Stearns
Carl Gutierrez, 01.04.08, 6:50 PM ET

Bear Stearns probably wishes it could hibernate through the winter.

On Friday morning the New York-based brokerage house, along with its
peers, fell after the Labor Department reported the unemployment rate
increased more than economists had expected, casting a gloomy shadow
on the coming year (See "Dreary December For U.S. Jobs").

But shares of Bear Stearns (nyse: BSC - news - people ) were pushed
down 5.9%, or $4.96, to close at $78.87, after investors learned that
company officials are expected to meet in the middle of January with
U.S. prosecutors to discuss the collapse of two of its hedge funds.
The news was first reported by CNBC.

According to the report, investigators from the U.S. Attorney's Office
in Brooklyn are examining conference calls between managers and
investors to see if the company made appropriate disclosures to
investors.

Over the summer the two funds, the High-Grade Structured Credit
Strategies Fund and the High-Grade Structured Credit Strategies
Enhanced Leverage Fund, sought protection from creditors after
investing heavily in collateralized debt obligations, commonly known
as CDOs, backed by the subprime mortgages. The blow-up lead to the
ouster of Bear executive Richard Marin

The probe is expected to focus on officials in charge of the funds,
and any indictments could prove disastrous for Bear Stearns.

Bad bets on subprime mortgages and related write-downs led to an $859
million fourth-quarter loss at Bear the first loss in the history of
Wall Street's fifth-largest investment bank