Rumors have been swirling around Bear Stearns [1] for the longest time. But they really kicked into high gear this week when the stock fell 20 percent, notes the AP. Prices for its credit default swaps have soared. The firm has tried to put a stop to it. CEO Alan Schwartz put the word out that the bank was comfortable with earnings estimates, and the firm says it does not face liquidity issues. But it can't shake talk that it has been forced to take a lot of collateral from hedge funds that cannot meet margin calls. That collateral, unfortunately, can easily be sold, meaning Bear may get stuck with a lot of worthless paper. Richard Bove of Punk Ziegel tells the AP that the Fed may have been reaching out to Bear when it unveiled plans to swap $200 billion in Treasuries for mortgage debt held by banks.  

For more:
- here's the AP article [2]

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