Bank's Collapse Has Little Effect on Pa.

Backed by the Federal Reserve, rival bank JPMorgan Chase & Co. agreed Sunday to buy Bear Stearns, which should ensure that the 85-year-old bank's obligations are upheld, officials said.

All told, Pennsylvania's two largest pension funds and Treasury control more than $100 billion in investments, but only a narrow slice were linked to Bear Stearns.

Officials in the budget office of Gov. Ed Rendell said Bear Stearns has not been a lead issuer of state debt in many years, and they said they expected no impact on the state's existing debt or its ability to issue new debt.

The Pennsylvania School Employees' Retirement System has committed $450 million to two investment partnerships that are managed by Bear Stearns' private equity arm, Bear Stearns Merchant Banking, but an official said it is a stand-alone affiliate of Bear Stearns that has a significant amount of independent capital.

The proposed sale of Bear Stearns "does not impact the partnership's day-to-day operations or that of the portfolio companies," PSERS spokeswoman Evelyn Tatkovski said.

PSERS did have 76,000 shares of Bear Stearns stock that plummeted in value in one week from about $70 to below $3. However, the pension fund also holds 2.3 million shares of JPMorgan, which Tatkovski said offset the loss when the value rose above $42 from below $38 in the same week.

The state Treasury holds $8.5 million in bonds issued by Bear Stearns, while the State Employees' Retirement System holds $3.5 million in bonds issued by Bear Stearns, agency officials said.