2 Bear Stearns funds face shutdown - report Rescue plan is falling apart for the hedge funds heavily invested in securities backed by subprime mortgages, WSJ says. June 20 2007: 4:30 AM EDT LONDON (CNNMoney.com) -- Two Bear Stearns hedge funds face shutdown as a plan to rescue the funds is falling apart, according to a report in the Wall Street Journal. The two hedge funds at Bear Stearns (Charts, Fortune 500) are heavily invested in securities made up of bonds backed by subprime mortgages, the newspaper said. The subprime market, which gives home loans to borrowers with weak credit, has been roiled by rising defaults. The Journal said Merrill Lynch (Charts, Fortune 500), which is one of the hedge funds' lenders, has plans to seize collateral from the two funds and sell it. Other major lenders include Goldman Sachs (Charts, Fortune 500) and Bank of America (Charts, Fortune 500), the report said.