How to rate the worst news? First ever loss? Biggest write-off? There is something exceedingly unsettling when two venerable financial-sector firms suffer the way Bear Stearns and Morgan Stanley suffered in their fourth quarters. Bear reported its first loss in its 84-year life, posting a negative $854 million in the wake of total net subprime writedowns of $1.9 billion, for the quarter ended November 30.

That compares to net income of $563 million in fiscal fourth quarter of 2006. Net income for the fiscal year was $233 million, a fraction of the $2.1 billion of fiscal 2006. Remember how Morgan Stanley was expecting to write down $3.7 billion? That grew in a month to $9.4 billion, and resulted in a $3.7 billion loss for its fourth quarter ended November 30. Morgan even reported negative revenue of $450 million for the period.

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