Bear Stearns creating concern...

Doing the typical, "it can never happen to me" the recent problems at Bear Stearns is creating a small amount of concern that the same thing could happen to other hedge funds. While it is many the more richer elite that invest in these types of funds if there is a larger scale failure? People that don't have a diverse enough portfolio could be facing some very rough times...and it could hit us regular folk as well:

The bailout by Bear Stearns is one of the largest such moves since Wall Street's investment banks bailed out Long-Term Capital Management in 1998 to avoid a collapse of the broader financial markets.

It is not alone in facing risk from its own hedge fund portfolio, either. Major financial institutions like Goldman Sachs Group Inc., JPMorgan Chase & Co., and Citigroup Inc. also manage tens of billions of dollars in hedge funds, according to Moody's Investors Service.

On Monday, researchers at Citigroup said subprime mortgage bonds issued last year by Goldman were being downgraded by rating agencies at a faster pace than any other issuer.

Defaults on mortgages to risky borrowers have risen to an all-time high, and that's done more than just hurt the long-suffering housing market. It has hurt the ability of banks to package mortgage loans as securities that can be traded — which is something many borrowers don't realize their lender even does.

"This is an unfolding story," said Dick Bove, an analyst with Punk Ziegel. "It might take months to see the effects on a whole range of areas. For banks, it means they'll be less likely to write loans, borrowing costs go up, and ultimately stocks could fall. It's like a wave crashing."