The shocking fall of Bear Stearns Cos. and its bargain-basement purchase by JPMorgan Chase & Co. will cost shareholders billions of dollars and thousands of employees their jobs, but there may be another, less-visible victim of the banking disaster: charitable organizations, particularly those in New York. For all of its rough-and-tumble reputation, the securities firm has been among the most generous givers on Wall Street. One philanthropy that may feel the pinch is UJA-Federation of New York, which fosters Jewish identity and administers aid throughout the world from helping victims of Hurricane Katrina to providing food, health care and education to 1,000 street kids in Istanbul. Bear executives gave $4 million to the UJA last year, more than twice as much as executives at any other Wall Street bank, estimates UJA senior vice president for resources development Paul Kane.
Alan (Ace) Greenberg, 80, chairman of Bear Stearns executive committee, says the firms 1,000 senior managing directors, who are required to give 4 percent of their pay to charity, last year donated as much as $80 million.
Bears 4 percent tradition dates back to the firms days as a small private partnership in 1970. Somebody said, How do you enforce it? recalls Greenberg. I said, We use the honor system. We ask all of our senior managing directors if they gave 4 percent to charity and, regardless of their answers, we ask to see their tax returns. Thats the honor system, right?
With the companys sale to JPMorgan, Bear executives expect the 4 percent rule to go the way of the firm, into the history books. A JPMorgan spokeswoman says the policys fate is still being determined, along with many other issues, given the haste with which the deal was struck.