ALEX COHEN, host:
As we've just heard, Bear Stearns stock is going for less than a latte at Starbucks. Not a great morning to be a Bear Stearns investor, but maybe it's even worse for the people who work there. The brokerage firm employs 14,000 people. While no layoffs have been announced yet, employees' futures must be uncertain at best.
MARKETPLACE's Janet Babin is here with us. And Janet, Bear Stearns employees, we should begin by saying, don't actually work for Bear Stearns anymore, right?
JANET BABIN: That's right, Alex. This morning employees were told that they now work for JP Morgan. And of course they don't know how long they'll have that deal.
In addition to that news, as you've been saying, you know, they found out that their company stock, which at one point this summer hit $170 a share, is now worth about a latte or less than that.
I spoke with Huge Johnson this morning about what these staffers must be going through. He's chairman of the money management firm Johnson Illington Advisors. And he says Bear Stearns employees are probably more worried about their stock and their retirement right now than about their jobs.
Mr. HUGH JOHNSON (Chairman, Johnson Illington Advisors): Most of the employees had a significant percentage or a meaningful percentage of their assets tied up in Bear Stearns stocks. And now, of course, there's been a firesale, and the value of their nest egg has been reduced considerably.
BABIN: Now, according to one report, at least 30 percent of Bear Stearns stock is held by its employees. And for a lot of traders and other employees at Bear Stearns, the majority of their pay comes from company stocks. So a lot of them just devastated today.
COHEN: But Janet, rumors about Bear Stearns' problems surfaced several weeks ago. So weren't employees expecting this or something?
BABIN: You know, you would think that they had their resumes ready to go, Alex. But I also think that we can't underestimate the shock value here of what that's like, to be in on Friday and to think, okay, you know, my retirement account or my kid's college - I got 30 bucks a share - and today to find out, you know, it's worth $2 a share, you know, a lot of senior staffers here - just trying to figure out how that valuation can make sense. They just weren't prepared for this sharp deterioration of their stock, and some of them are figuring maybe it'd be better off in a bankruptcy situation.
I just spoke with one Bear Stearns employee who asked, of course, not to be named, and he just said, you know, this is just devastating and we're trying to figure out how this valuation can make sense.
COHEN: And I'm sure a number of employees there must be looking for some way to get out, maybe find a new job.
BABIN: That's right, especially not the senior staffers. You know, but there've been estimates that only about 10 percent of Bear Stearns workforce will survive at all.
I spoke with Marc Freed, at fund-of-funds group Lyster Watson, about the employee fallout, and he says that he thinks the area of Bear Stearns most likely to survive is the capital introductions area, it's the marketing arm - arm, rather, of Bear Stearns' prime brokerage; that could survive, but everyone else pretty much is redundant.
And of course now, Alex, not a great time to be looking for a job on Wall Street. As we said, we're in the midst of a credit crisis and many economists believe recession is looming, if not here already. So if you're an employee of Bear Stearns and you're jumping ship, you might just find yourself landing on another sinking ship.
COHEN: Thanks for bringing us up to date, Janet. That's Janet Babin of public radio's daily business show MARKETPLACE. Transcript provided by NPR, Copyright NPR.
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