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April 03, 2008 - Image 48

Resource type:
The Detroit Jewish News, 2008-04-03

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Federation Worries

Collapse of Bear Stearns shakes
UJA-Federation of New York.

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Bear Stearns
employees gave
$4 million each
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(248) 372-7100

Marty Rosen

David Rogovein

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April 3 2008

he UJA-Federation of New
York is bracing for potential
fallout from the collapse of
the Bear Stearns investment bank.
A cloud of uncertainty is hanging
over the company after a run on its
bank led to its controversial sale to
JPMorgan Chase for pennies on the
The sale, originally
for $2 a share — the
price was later raised
to $10 — on stock that
had been worth $89 a
share last December,
decimated the sav-
ings and retirement
funds of Bear Stearns
employees and wiped
out salaries, the major-
ity of which are often paid in year-end
bonuses based on profits.
The collapse could have a broad-
ranging negative effect in New York,
as Bear Stearns is among the 25 larg-
est employers in the city. Many of its
14,000 employees are Jewish.
The loss of salaries and the poten-
tial for mass layoffs could put a strain
on the local nonprofit world, said
the New York federation's senior vice
president, Paul Kane.
"We feel horrible about this:' Kane
said. "There were a lot of friends close
to us in Bear Stearns, and this has big
implications for us and others. It has
huge implications for us and other
nonprofits in this city"

that advance. Its chairman, Alan "Ace"
Greenberg, famously would act as the
master of ceremionies at the federa-
tion's annual Wall Street dinner, stand
ing on the dais, calling out names and
publicly soliciting six- or seven-figure
In 2006, that banquet took in $21.5
Some $30 million has been pledged
to the Wall Street divi-
sion for the 2008 fiscal
year, which ends for the
federation on June 30.
While the federation
typically collects on 94
percent of its pledges,
there is no telling how a
downward spiral in the
market will affect that
The federation's total
campaign is up 5 percent compared to
the same period last year, with $115
million in pledges. Last year the cam-
paign brought in $151 million.
But the question is how the Bear
Stearns collapse and its broader effect
on Wall Street — analysts say that
Lehman Brothers, another historically
Jewish bank and significant donor to
the federation — will affect the intake
of dollars into the federation and the
output of services it must provide to a
new struggling class.
The federation has readied its
service agencies and is making avail-
able job counseling services to those
affected by the Bear Stearns crisis.
Even before the collapse of Bear
Stearns, the broader dip in the
economy already had led to an
increase in demand for services in
New York. In the last three months,
the Metropolitan Council on Jewish
Poverty opened 40 cases due to the
sub-prime mortgage crisis.
The FEGS Health and Human
Service System has seen about a
20 percent increase in cases at its
Brooklyn Resource Center, which
serves a largely Russian clientele. The
increase has come primarily from
individuals in support positions in the
finance industry and others who are
worried about losing their jobs and
seeking other opportunities.


Charitable Culture
Bear Stearns, which lists philanthropy
as one of its five guiding principles, is
among the most charitable firms on
Wall Street, donating about 4 percent
of its profits to charity each year, Kane
said. He noted that the federation is
one of its largest recipients, bringing
in about $4 million annually in contri-
butions from Bear Stearns employees.
The federation garnered about $40
million through its Wall Street division
last year — a number that has soared
in recent years as Wall Street recovered
from the post-9-11 recession.
Bear Stearns was at the center of

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