End of the road for Bear Stearns

Wall Street bank is consigned to history after 85 years as it is snapped up by JP Morgan

The 85-year-old Wall Street bank Bear Stearns was consigned to history today as shareholders approved a sale of the cash-strapped institution to rival JP Morgan.

A special meeting convened at Bear's headquarters in midtown New York lasted less than an hour. With this formality concluded, Bear is set to be subsumed into JP Morgan with the buyout closing on Friday.

Media were barred from attending but those in the room said Bear's chairman, Jimmy Cayne, made a brief statement expressing personal regret for the company's collapse.

"That which does not kill you makes you stronger," said Cayne according to the Wall Street Journal's website. "By now we all must be Hercules."

JP Morgan is buying the business for $2.2bn (£1.1bn) in a deal supported by the Federal Reserve, which has agreed to guarantee up to $29bn of Bear's riskiest assets.

People arriving at the building this morning described the mood at the firm as "solemn".

An administrative assistant carrying a Bear Stearns shoulder bag said she had worked at the bank for 16 years but was expecting to leave on Monday.

"It's very sad - it's like a family here," said the woman, who declined to give her name. "I'm supposed to pick up my papers today."

Bear Stearns suffered a run on the bank in March when investors lost confidence in the firm's financial stability. The bank lost more than $10bn of liquidity in a single day as customers, trading partners and investors fled.

As many as two-thirds of Bear's 14,000 employees are likely to lose their jobs. The bank's demise is the biggest Wall Street bankruptcy since the collapse in 1990 of Drexel Burnham Lambert, which suffered huge losses in the junk-bond market, causing almost 10,000 job losses.


Andrew Clark

The GuardianTramp

Related Content

Article image
Bear Stearns blame game begins

A feud has erupted in the boardroom of Bear Stearns with directors trying to pin the blame on each other for the Wall Street firm's spectacular collapse

Andrew Clark

07, May, 2008 @5:14 PM

Bear Stearns: what the economists say

Philip Shaw, chief economist at Investec, described the Bank of England's £5bn injection into UK money markets today as "a substantial sum" as it is equivalent to about a quarter of banks' reserve targets. "However despite the size of the add, the initial response from interbank markets has been one of disappointment, in the sense that it is insufficient." He noted that the pound is one of few currencies to fall against the beleaguered dollar overnight and has weakened further. "One reason is that today's BOE actions highlight the extent to which the UK is vulnerable to the dislocations in credit markets. Implicitly the thinking is that if technical measures to reintroduce liquidity to markets fail to have the desired effect, the MPC could cut the Bank Rate more aggressively. This is not at all out of the question, but it will take a while to determine how realistic this prospect is, particularly with inflation above target and rising."

17, Mar, 2008 @11:41 AM

Article image
Bear Stearns becomes the latest sub-prime casualty

The Wall Street brokerage today revealed the first quarterly loss in its history, slipping $854m into the red after falling foul of America's sub-prime mortgage crisis

Andrew Clark

20, Dec, 2007 @4:18 PM

Bear Stearns: what the analysts say

Omer Esiner, a strategist at Ruesch International, said the bailout brings into question which other big firms out there are in need of similar emergency funding. He added that this risk aversion will help the yen gain against the dollar

Angela Balakrishnan

14, Mar, 2008 @3:47 PM

Bear Stearns chief steps down over sub-prime loss

The veteran Bear Stearns boss Jimmy Cayne last night gave up his role as chief executive of the Wall Street brokerage following intense criticism of losses in America's sub-prime mortgage crisis

Andrew Clark in New York

10, Jan, 2008 @11:47 PM

Article image
Bear Stearns saved by rock-bottom JP Morgan bid

Cash-strapped Wall Street investment bank rescued from collapse by JP Morgan Chase takeover for the rock-bottom price of $236m

Andrew Clark in New York

16, Mar, 2008 @11:44 PM

Article image
Bear Stearns shares plummet as it seeks emergency funding

Wall Street investment bank's future is hanging in the balance after it was forced to ask the US Federal Reserve for an emergency injection of cash

Andrew Clark in New York

14, Mar, 2008 @6:47 PM

Article image
Markets tumble after Bear Stearns rescue fails to reassure

Wall Street sharply lower and billions of pounds wiped off UK banking shares as markets reel from bailout

Fiona Walsh, business editor

17, Mar, 2008 @5:31 PM

Article image
Bear Stearns to axe 8,000 staff

Over half of Bear Stearns's employees will be made redundant, with around 600 jobs at risk in London

Richard Wachman

23, Mar, 2008 @1:31 AM

Bear Stearns rescue bid raised fivefold

Increase in takeover price to $10 a share aims to calm investment bank's angry shareholders

Andrew Clark in New York

25, Mar, 2008 @12:34 AM