It looks as if the subprime chickens are coming home to roost. Tonight, after the market close, Bear Stearns announced that two of its hedge funds, which had invested heavily in lower-grade mortgage debt, are in worse shape than most observers had expected.

One of the Bear funds has lost all but 9% of the value it had as recently as the end of April. The other fund has been essentially wiped out. (Yep, nothing left.)

Undoubtedly, the debacle at Bear Stearns is a bitter pill for the so-called sophisticated investors who had plowed several billion dollars into the funds. It's worth remembering, though, that these folks knew they were sinking their cash into IOUs of less-than-stellar quality.

Furthermore, the fact that Bear Stearns was borrowing money (using "leverage") to purchase additional junk paper for the funds was no secret. It was all disclosed in black and white.

So there's no scandal of global proportions here. People misjudged the risks of a speculative investment and lost money -- a lot of it.

Despite all of the subprime news, I still like select banks for solid yields and forward potential.