Bear Stearns' focus on the US and trading proved to be the firm's undoing in the third quarter as its net income fell 61% on the back of a 88% drop in fixed-income revenues and a $200m (€142m) loss from two bankrupt hedge funds.

Bear's net income for the third quarter was $171.3m, a 61% drop from $438m for the third quarter of 2006. That is the steepest year-over-year revenue drop in over 10 years for the firm, which prides itself on its 83 years of profitability.