A Bleak Mood At Bear Stearns

Buyout Talk Leaves Employees in Limbo

NEW YORK, March 17 -- The bagpipes' notes filling the airy atrium of Bear Stearns's midtown Manhattan headquarters Monday had all the solemnity of a funeral dirge. But the pipers in their tartan kilts and caps were there to celebrate the city's annual St. Patrick's Day parade starting a block away and were just using the venerable firm's lobby to warm up.

That odd juxtaposition, along with schoolchildren in Irish dancing dresses crowded into the lobby, was part of the surreal atmosphere for Bear Stearns's 14,000 employees, who came to work with their bank's sale all but closed, their options packages gone, their job security unclear.

Despite the worry that Bear Stearns's collapse could presage a bigger financial crisis and ensnare other wobbly investment banks, Wall Street managed to avoid the wholesale sell-off many were initially expecting. After an early morning dive, followed by a volatile day of trading, the blue-chip Dow Jones industrial average rallied in the final minutes of trading to close up 21.16 points, or 0.18 percent, to 11,972.25.

On Friday, Bear Stearns's stock was worth $30 a share. Over the weekend, rival bank J.P. Morgan Chase reached a deal to buy the troubled firm for the fire-sale price of $236 million, or just $2 a share. Employees coming to work Monday morning found a $2 bill mischievously taped to one of the firm's revolving doors.

They gathered in the lobby of Bear Stearns's skyscraper headquarters to trade gossip and talk on cellphones or to step outside for a smoke and catch the bagpipers and high school marching bands practicing before the big parade. Nobody had any real news -- who would be laid off, who would keep their jobs. There were mostly just a lot of stunned faces.

"I'm here for the funeral," said one young man in a colorful striped shirt, who, like most of the Bear employees, did not want to talk to the news media. He spoke on condition of anonymity. "No luck of the Irish."

"Would you believe I've been here five days?" he said between drags on his cigarette while the Sword of Light Pipe Band tuned up on the street. "Do you know where I came from? J.P. Morgan." He questioned how long the deal had been in the works, saying, "$2 a share doesn't happen that quick."

He added, "It's not a pretty picture" before disappearing back inside.

As he spoke, burly blue-shirted security men exited Bear's glass doors carrying several large gray metal containers wrapped in plastic and seals. Someone joked that it was the firm's cash going to J.P. Morgan's headquarters around the corner. Some employees were seen earlier carting out their personal belongings in boxes.

On Wall Street, Bear Stearns had a reputation as a hard-nosed and aggressive maverick prone to taking risks. But the rapid and stunning fall of a firm that had been around for 85 years caused a jolt of nervousness among bankers and traders, who openly wondered where the financial fallout might strike next.

"It's just the beginning. These are terrible times; everybody is anxious" said Steven Rosenberg, 37, a vice president of a financial institution -- he declined to say which one -- who was having an end-of-the-day beer at Harry's Cafe, near Wall Street. "I see locusts, black skies. It's very bad."

"It's Monday. Everything bad happens Monday," said his colleague, a strategic business manager at the same firm. "We were surprised only one institute stepped up to buy Bear Stearns. Life goes on in ebbs and flows. You keep doubling down until there is no more money."