80-Year-Old Bear Stearns' Fall - Ripple Effect Felt
by Adam Davidson
The collapse of Bear Stearns, the country's fifth largest investment bank, is big news on Wall Street, but is it also affecting everyday people - the kind of people who work right in Bear Stearns' neighborhood?
Bear Stearns' collapse has a clear, direct impact on a few thousand people. Investors lost billions. Many of the 14,000 thousand employees might lose their jobs.
Other banks in serious trouble
Yes, and everyone is asking who's most at risk. Some of the names mentioned most frequently are UBS and Lehman Brothers, both of which have a lot of exposure to subprime and mortgage-related securities. Shares of UBS dropped more than 14 percent in Zurich on Monday, after news reports suggested the company is weighing deep cuts in jobs and assets and might sell off its U.S. brokerage business.
Lehman, meanwhile, recently announced it was laying off 5 percent of its workforce. At one point, Lehman shares plummeted 48 percent on Monday. The stock closed down 19 percent, despite assurances from Lehman's CEO that the company was not having cash flow problems. The firm is one of several financial institutions that will report quarterly results on Tuesday, and investors are bracing for news of further losses.
"All of them could cause significant market volatility," Randy Frederick, director of derivatives at Charles Schwab & Co Inc., told Reuters. "Fear is higher now than it has been in a long time."