The New York Times reports that JPMorgan Chase & Co. (NYSE: JPM) and The Bear Stearns Companies (NYSE: BSC) are in talks this afternoon which could result in a $2 billion deal -- about $1.0 billion for the Bear headquarters on Madison Avenue and another $1 billion for whatever net worth is left after paying off obligations. This would leave Bear shareholders down $1.5 billion from its current market capitalization.

This would be a relatively benign outcome for shareholders -- depending on whether the deal was a stock swap or involved cash. The alternative is for Bear to file for bankruptcy which would be a total wipe out for shareholders and would freeze the assets of those Bear customers which have not yet withdrawn their money. The deal is being rushed for completion by 8 p.m. EDT -- so it can be announced before the Asian markets open for Monday morning trading.

For those who are upset about the Fed bailing out Bear, this deal would be a major heaping plateful of crow. And it could restore some level of confidence in the credit markets. Alternatively, it might just be a temporary bright spot in a very gloomy stretch of financial weather. It's unclear whether Lehman Brothers Holdings Inc. (NYSE: LEH) could be next and if so, whether there's any financial institution out there who can take that over.

Update: The Wall Street Journal reports that JPMorgan wants Bear's prime brokerage business which deals with hedge funds and that Bear's clearing and investment banking units could also prove valuable. However, JPMorgan may back away unless it can limit its exposure to Bear's risks.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.