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End of Cheap Credit Hits Homes, Businesses
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Commercial real estate firms are also in danger if they have relied heavily on borrowed funds for projects still underway.
"It seems that the huge economy of the United States is getting a huge margin call from the whole world," said one investment banker who spoke on condition of anonymity because he was not authorized to speak on behalf of his firm.
One sign of worry about the prospect of a slowing U.S. economy is oil prices. The price of crude oil slid $4.53, to $105.68 a barrel, on the New York Mercantile Exchange. Although the price was still high, it was one of the biggest drops in weeks.
While many of the effects of the credit turmoil might not materialize for several weeks or months, many ordinary investors don't need to wait.
The collapse of Bear Stearns has hammered several mutual funds with big stakes in the investment firm. Bill Miller, the legendary manager of Legg Mason mutual funds, held more than 8 million shares, or 6.79 percent, of Bear Stearns in two funds at the end of 2007 when they were $88.25 a share. The shares were worth $706 million then. If J.P. Morgan's buyout goes through, they will be worth $16 million.
Legg Mason spokesmen said Miller would not comment.
Other major institutional stakeholders in Bear Stearns included Barclays Global Investors, State Street, Janus Capital Management and Vanguard Group.
One winner is former Bear Stearns executive Warren J. Spector, who sold most of his shares after losing a power struggle. Between 2003 and early 2007, he sold $157 million worth of the firm's stock, at prices as high as $164 a share.
