NEW YORK, Reuters
Bear Stearns Cos Inc. said Thursday it will cut about 240 subprime lending jobs as a global credit squeeze and a subprime lending crisis rattles markets.
The New York investment bank employs about 15,100 people worldwide and said the cuts would not affect Wall Street jobs. About 100 jobs are being cut at Encore Credit, a subprime lender Bear Stearns acquired in the past year for about US$26 million, the company said. About 140 more jobs will be cut at Bear Stearns Residential, which funds risky subprime mortgages and Alt-A loans for borrowers with decent credit, the company said. The crisis in the subprime lending industry recently buckled two hedge funds at Bear Stearns and led to the recent ouster of co-president Warren Spector. Several dozen U.S. subprime lenders have either shut down, curtailed their operations or cut jobs. Subprime lending, meanwhile, has plummeted amid a rising wave of delinquencies and defaults. Wall Street’s packaging of these loans into securities has slowed to a trickle. Bear Stearns said in a statement the two units had evaluated market conditions and staffing levels in an effort to eliminate redundancies and improve their efficiency. “As a result we have made the decision to reduce our staffing levels and close two operation centers,” Bear said. The centers are located in Glen Allen, Virginia and King of Prussia, Pennsylvania.