More Bear Stearns & Greenspun

Bear Stearns, which gets about half its profit from the debt market, said revenue from bonds climbed 27 %, dwarfing gains from trading stocks and advising on mergers and acquisitions.

It was held back by a decline in residential mortgages, echoing comments made yesterday by Lehman Brothers, the second-largest investment bank for securities backed by home loans.

"Reflecting weakness in the U.S. residential (MBS) mortgage backed securities market" The firm underwrote $21 billion of mortgage-backed bonds in the quarter, 28 % lower than a year earlier.

Bear Stearns held $1.3 B of residuals, the parts of MBS mortgage securities that are the highest yielding, at the end of November.

Greenspan: "
If prices go down, we will have problems -- problems in the sense of spillover to other areas. It is not a small issue.

If we could wave a wand and prices go up 10 percent, the subprime mortgage problem would disappear"
. Prices are going down...

Its "quite remarkable that we have not seen impact on personal consumption" from the broader housing slump. "Yet" would be the operative word...

The boom in home prices from 2001 to 2005 accounted for a "fairly significant" portion of consumer spending... "at the moment we are not seeing impact" on consumption.

"At the moment" would be the operative phrase...

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