What the Bear Stearns collapse could mean to states

While the Federal Reserve has been put in an awkward position by JPMorgan Chase's (JPM) decision to raise its bid for Bear Stearns (BSC) to $10 a share from $2, some states are appreciative of the offer. Alaska, for example, lost $3 million when the nearly 44,000 shares of Bear Stearns stock it owned tumbled from $88.25 a share earlier this year to $2.

Some states invest in both Bear Stearns and JPMorgan, and their losses from the Bear Stearns freefall have been negated by the increase in JPMorgan stock, Ohio among them. The expected job losses on Wall Street mean less income and sales tax revenue for New York. In good times, Wall Street can account for up to 20% of New York’s revenue. Similar hits could mean bad news for some states already facing budget shortfalls. 22 states are reporting a cumulative budget shortfall of at least $37 billion. Arkansas is not among them.