Bear Stearns Recent Discussions Indicate 2 Main Contenders

Department heads at Bear Stearns met with officials at J.C. Flowers and JPMorgan Chase Saturday afternoon to give an overview of their business divisions, including headcount and profit and loss positions, CNBC has learned.

The discussions indicate that potential bidders for Bear have been narrowed to those two firms, although other last minute contenders could still weigh in, according to one source aware of the talks.

While Bear would certainly like more bidders, time has become a major issue for the investment bank.

On Friday Bear Stearns Bear Stearns Co IncBSC
30.0  -27.00  -47.37%  NYSE
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[BSC  30.0    -27.00  (-47.37%)   ], the fifth largest U.S. investment bank, said a cash crunch forced it to turn to the Federal Reserve and JPMorgan for emergency funds, intensifying fears of a widening global credit crisis and driving its shares down as much as 50 percent. It also stepped up efforts to find a buyer.

On the same day S&P lowered its long-term counterparty credit rating on Bear to “BBB” from “A,” and it placed long-and short term ratings on credit watch with negative implications.

although other last minute contenders could still weigh in, according to one source aware of the talks.

While Bear would certainly like more bidders, time has become a major issue for the investment bank.

On Friday Bear Stearns Bear Stearns Co IncBSC
30.0  -27.00  -47.37%  NYSE
Â
Â
Quote  |  Chart  |  News  |  Profile
[BSC  30.0    -27.00  (-47.37%)   ], the fifth largest U.S. investment bank, said a cash crunch forced it to turn to the Federal Reserve and JPMorgan for emergency funds, intensifying fears of a widening global credit crisis and driving its shares down as much as 50 percent. It also stepped up efforts to find a buyer.

On the same day S&P lowered its long-term counterparty credit rating on Bear to “BBB” from “A,” and it placed long-and short term ratings on credit watch with negative implications.

One big problem is that whoever buys Bear will want to retain some of the talent. However, they are already being offered jobs elsewhere.

In the meantime, the Bear debacle is a huge blow to New York City and its Metro-area economy where most of Bear’s workforce lives. Many will be out of work. Bankers and other execs have lost fortunes since many were paid in Bear stearns stock.

The Bear situation rocked bank stocks Friday. Shares of Lehman Brothers Holdings Lehman Brothers Holdings IncLEH
39.26  -6.73  -14.63%  NYSE
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[LEH  39.26    -6.73  (-14.63%)   ] fell sharply, as did Morgan Stanley Morgan StanleyMS
39.55  -2.05  -4.93%  NYSE
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[MS  39.55    -2.05  (-4.93%)   ] and Goldman Sachs Group Goldman Sachs Group IncGS
156.86  -8.58  -5.19%  NYSE
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[GS  156.86    -8.58  (-5.19%)   ].

Bear Stearns Recent Discussions Indicate 2 Main Contenders (Editting by Alice Zhan)

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