Bear Stearns tries to reassure clients

Bear Stearns Cos. this week began sending letters to clients seeking to reassure them that the firm was financially sound and to keep them from defecting to rival firms.

“The Bear Stearns franchise is financially strong,” says the letter, which was obtained by the Associated Press. “Rest assured, Bear Stearns has seen challenging markets before and has the experience and expertise to serve you and us well.”

The New York-based investment bank, the fifth-largest on Wall Street, has also given its employees talking points for use with clients. The talking points suggest describing the recent management change as “appropriate,” saying the company has “ample liquidity” and outlining Bear Stearns’ “disciplined risk culture.”

Jimmy Cayne, the company’s longtime chairman and chief executive, has called institutional shareholders and his counterparts at major Wall Street banks to reassure them about the firm’s condition.

The communications are aimed at allaying fears that have risen about the company’s fiscal shape since two hedge funds managed by Bear Stearns collapsed, the firm ousted its co-president and Standard & Poor’s changed its outlook on the company’s debt rating to “negative.”

The two hedge funds made multibillion-dollar bets on mortgage-backed securities.

Bear Stearns shares have lost nearly a third of their value this year but battled back in recent days, gaining 13% since Friday.