“There is no truth to the liquidity rumors,” Russell Sherman, a spokesman for New York-based Bear Stearns, said in an interview. Rumors have been floating around for about a week. Are agitators taking advantage of the market? Granted, nobody really knows who holds tainted paper but the picture is getting clearer. However, as anybody who has been under attack can testify, it is very hard to disprove a negative when allegations are not based on facts to begin with. Of course some rumors may be based in fact.

Bear Stearns, the second-biggest underwriter of mortgage- backed bonds, declined $6.52 to $63.56 in composite trading on the New York Stock Exchange at 1:55 p.m., the lowest level since March 2003. The shares pared earlier losses of as much as 14 percent after Bear Stearns said the speculation had no basis.