Why Barclays Needs Bear Stearns

Could a deal with Barclays (BCS Quote) be the tonic for Bear Stearns (BSC Quote)?

Both firms have had a rough go of it lately. Last week, London-based Barclays lost its $89 billion bid for ABN AMRO(ABN Quote) when bidders led by Royal Bank of Scotland won shareholder approval to purchase the Dutch bank.

For its part, Bear Stearns is trying to recover from an embarrassing summer that saw two of its hedge funds collapse under the weight of wrong-way bets on subprime mortgage-backed securities. The firm reported last month that its earnings plunged 61% from a year ago.

It's widely assumed that Bear would love to line up a deep-pocketed partner, if not an outright buyer. Meanwhile, Barclays must be looking to bounce back from its failed play for ABN. So Bear's misery could spell opportunity for Barclays. ...