Bear Stearns' annus horribilus has just got worse with Barclays Bank suing the Wall Street firm, claiming it used two hedge funds that collapsed last summer as places to unload troubled assets. Barclays, which forked out $400 million in loans, is claiming Bear Stearns used the funds as place to unload excessively risky or troubled assets.

The lawsuit adds to the problems facing Bear Stearns. BusinessWeek reports that securities regulators and prosecutors are investigating allegations that Bear insiders were given preferential treatment and allowed to exit the beleaguered funds while the exit doors were shut for others. The hedge funds, the elegantly named Bear's High Grade Structured Credit Strategies and High Grade Structured Credit Strategies Enhanced, were managed in part by Ralph Cioffi. They were loaded up with all sorts of exotic securities linked to subprime credit.

Which kind of makes you wonder who was more stupid and greedy - Bear Stearns or Barclays?

Cioffi is now negotiating the terms of his departure from the investment bank. Probably working out how many zeroes in his package. But that hasn't stopped him putting together a $250 million fund centered on investments in the battered mortgage market, reports the New York Post.