JP Morgan is shutting down a once legendary Bear Stearns business unit known as FAST, an acronym for Financial Analytics and Structured Transactions. It was a traditional starting place for the Bear Man, typically a recent undergraduate who might have lacked the Ivy-league pedigree expected at some of Bear’s Wall Street rivals.
FAST offered analysis on complex credit transactions. It had about 400 people working for it after Bear was acquired by JP Morgan, according to Financial News. The memo obtained by Financial News says the employees have been reallocated to a variety of businesses, and a JP Morgan spokesperson insists the business wasn’t shut down.
Except that’s not the way it feels to veterans of FAST.
“We’ve been scattered to the winds. JP Morgan is doing its best to destroy whatever was left of the Bear Stearns culture,” one former Bear Stearns employee told us.
JP Morgan might have good reason to want to destroy that culture. FAST was supposed to be the cutting edge of the credit market, with specialists in mortgages, mortgage backed securities and derivatives. Last year, JP Morgan paid $1.5 billion for Bear Stearns. Although the company had reported more than $11 billion in common equity, JP Morgan discovered that all that had been wiped out by credit driven losses.
Still, some Bear vets say that they have received indications of interest from firms and hedge funds interested in buying distressed credits.
“The less Bear there is around here, the more likely we are to leave,” the Bear vet said.
JP Morgan remains constrained by TARP pay restrictions that may also make it difficult to retain employees habituated to large year-end bonuses.