Gothamist
A non-profit newsroom, powered by WNYC.
Gothamist
Listen Live
News
JP Morgan Buys Bear Stearns for Pennies on the Dollar
By
Dave Hogarty
Published Mar 16, 2008
Modified Mar 17, 2008
Share
FacebookTwitterRedditEmail
Never miss a story
Email address
By submitting your information, you're agreeing to receive communications from New York Public Radio in accordance with our Terms .
By
Dave Hogarty
Published Mar 16, 2008
Modified Mar 17, 2008
Share
FacebookTwitterRedditEmail
We rely on your support to make local news available to all
Make your contribution now and help Gothamist thrive in 2026. Donate today
Gothamist is funded by sponsors and member donations
Photograph outside Bear Stearns' offices on Friday by Mark Lennihan/AP
It's the New York banking equivalent of the Enron meltdown: Bear Stearns has agreed to sell itself to JP Morgan Chase at a fire sale price. When Bear Stearns' 14,000 employees left work Friday afternoon, the bank's stock had already plunged almost 50% in value, closing at $30 a share. But today they found out something much, much, much worse: their company has been purchased for a piddling $2 a share. That's $236MM for a company that was "worth" $3.54 billion on Friday. That's a 93% discount on Friday's closing price, and a 99% discount off January 2007's price of $170/share. Given that Bear Stearns' midtown headquarters had been valued as high as $1.5 billion, the firm's liabilities must have been enormous.
According to the NY Times, Bear Stearns' execs spent the weekend desperately trying to find a buyer willing to pay anything for the bank. To get the deal done, the Federal Reserve agreed to step in and help the bank remain liquid-- providing a $30B loan and agreeing to take over the administration of some of the bank's assets. Many speculated that if the Fed didn't step in, Monday's trading could have seen "ominous market disruptions."
The Wall Street Journal reports employees, who own about 30% of the stock, were hoping for a foreign buyer to avoid the massive layoffs which come with domestic mergers. With JP Morgan as the buyer, layoffs are almost certain, and the effect on New York City's budget and economy will not be good. That last point is hard to dispute: just last month, Citigroup wrote down a $10 billion loss on bad debt. And more is yet to come: the WSJ says that the effect of Bear Stearns' collapse could be dire. If Bear Stearns is worth just 2.5% of its previously stated book value, how much are all the other investment banks worth?
Update 10:36PM: the Nikkei index is down more than 500 points. And American stock index futures are also pointing south. Uh-oh!
Tagged
assets
bear stearns
book value
enron
jp morgan chase
layoffs
meltdown
mortgage crisis
Dave Hogarty
Read more
Gothamist is funded by sponsors and member donations
Gothamist is funded by sponsors and member donations
MORE news
Mamdani names re-entry specialist as chair of Rikers oversight board
Christopher Watler will help the department that a federal monitor says remains in crisis.
By
Ryan Kost
Published Oct 6, 2026 at 3:52 p.m. ET
NYC weighs expanding upstate reservoir following drought
The Delaware River Basin Commission is evaluating options to increase water storage, including expanding a reservoir in New York City.
By
Rosemary Misdary
News
NYC weighs expanding upstate reservoir following drought
The Delaware River Basin Commission is evaluating options to increase water storage, including expanding a reservoir in New York City.
By
Rosemary Misdary
Legionella found in Staten Island building's water system after 2 positive cases
By
Catalina Gonella
Legal 'loophole' helps NY Gov. Kathy Hochul, Bruce Blakeman raise millions
By
Jon Campbell
Police identify 2 men wanted for stabbing an off-duty NYPD officer
By
Ben Feuerherd
Never miss a story
Catch up on the most important headlines with a roundup of essential NYC stories, delivered to your inbox daily.
Sign upEmail address
By submitting your information, you're agreeing to receive communications from New York Public Radio in accordance with our Terms .