If Bear staff is cut, tough U.S. job market awaits

By Kristina Cooke

NEW YORK (Reuters) - It will come as no surprise to some Bear Stearns employees if they lose their jobs as a result of the company being sold to stave off bankruptcy.

Financial markets had been rife with speculation for weeks that the fifth largest U.S. investment bank was in trouble because mortgage bond holdings went bad.

"Bear Stearns professionals have been sending out their resumes, and this flow will only increase as the week goes on," said Michael Karp, chief executive officer of Options Group, a global executive search and strategic consulting firm based in New York. "The current market is not as bad as 1990-1991, but it's getting there."

On Monday, CNBC television news, citing unnamed sources, reported that JPMorgan Chase, which agreed on Sunday to buy Bear for $240 million, expected to cut about half of Bear's 14,000 employees.

Like other Americans, some of them would face a parched jobscape as the U.S. economy weakens and the cost of living rises. The U.S. unemployment rate in February was 4.8 percent and payrolls fell by 63,000, the second straight month of payrolls decline.

In the first two months of 2008, U.S. financial companies cut more than 20,000 jobs, according to employment consulting firm Challenger, Gray & Christmas Inc, as they racked up losses triggered by the collapse the subprime mortgage market.

Karp said Bear Stearns' mortgages, credit derivatives and structured finance divisions would be hardest-hit, along with investment banking, where there is overlap with JPMorgan.

"I think it will be difficult for a lot of the people who lose their jobs because of the state of the industry right now," said Paul Sorbera, president at Alliance Consulting, a financial executive recruiting firm based in New York.