You're going to be reading a lot about this in the financial press if you haven't already. The short story is that Bear Sterns made some bad bets with derivitives based on sub-prime loans. The positions they took were with borrowed money and they are now facing margin calls of around $9B. Merrill Lynch is their largest creditor for these obligations and may actually seize the securities involved in order to auction them off. The problem comes from a potential ripple effect that could be caused by an auction of the seized sub-prime derivitives, since the paper will likely be deeply discounted at auction. $Billions of ... (full story)