Bear Stearns, bitten badly by the housing crash, is short more than $1 billion on subprime mortgage securities — a big bet by the investment bank that the woes that have driven a historic collapse in the mortgage market are likely to continue. Bloomberg reported that Bear CFO Sam Molinaro said Friday that the New York firm’s “short” positions have jumped from $600 million at the end of November as the company has trimmed its positions in CDOs and underlying RMBS bonds. From the report:

… Molinaro said today that one of the firm’s biggest mistakes was “not being conservative enough and bearish enough on the subprime market.” The firm has reversed “long” subprime trades that stood at $1 billion at the end of August, Molinaro said. “There’s definitely a lot of short plays out there,” said Mark Adelson, a founding member of Adelson & Jacob Consulting in Long Island City, New York. Some subprime bonds “could easily be bad enough that they don’t pay off a penny,” said Adelson, a former Nomura Holdings Inc. mortgage analyst.

According to Bloomberg, company spokesperson Russell Sherman was quick to point out — after Molinaro’s remarks — that Bear’s short positions represent hedges on its long positions in mortgages. It’s not easy being a press rep these days on Wall Street, obviously. The truth here is that $1 billion is a huge directional bet on continued market woes, from one of the firms that has been unlucky enough to have had a front row seat to most of the carnage thus far. Accredited Home Lenders CEO James Konrath may want to take note of the above; the former subprime high-flyer said earlier this week it wants to “test the waters” sometime this year for a subprime-based RMBS issuance.