The subprime mortgage mess took yet another victim as Bear Steams (NYSE: BSC) reported its first loss as a public company when it was forced to write down $1.9 billion dollars in investments related to subprime mortgages, according to Bloomberg. Analysts expected a much lighter hit. This loss is $1.2 billion more in write-downs than predicted.

Bear Steams also was hit harder than its chief rivals Citigroup (NYSE: C), Morgan Stanley (NYSE: MS) and Merrill Lynch (NYSE: MER) on the trading side so overall revenue for the fourth quarter resulted in a net loss of $854 million or $6.91 per share. A year earlier fourth quarter results were a net income of $563 million, or $4 per share. Bear Stearns is the second-largest underwriter of U.S. mortgage bonds and it paid dearly for that lead role.

Bloomberg said the firm underwrote $7.3 billion of U.S. bonds, which was 17% less than last year and it managed just $1.18 billion in equity offerings, a 28% decrease. Yet Sanford Bernstein analyst Brad Hintz does see a rainbow at the end of this cloud. He told Bloomberg that he believes that we're heading into a recession and that's when traditional investment banking activities, such as mergers and acquisitions slow, while cuts in interest rates can help Bear's bond business. So Bear could benefit from the recession that's now looking more and more likely.

Since the loss was much greater than anyone predicted, expect the stock to fall today, but early trading made the stock price look like a yo-yo going up and down.