[LETTERHEAD OF CADWALADER, WICKERSHAM & TAFT]











May 10, 2001





The Bear Stearns Companies Inc.

245 Park Avenue

New York, NY  10167



Re:   Bear Stearns Capital Trust III

      7.80% Trust Issued Preferred Securities

      ---------------------------------------



Ladies and Gentlemen:



We have acted as U.S. federal income tax counsel to The Bear Stearns Companies

Inc., a Delaware corporation (the "Company"), and Bear Stearns Capital Trust

III, a Delaware business trust (the "Trust"), in connection with the preparation

and filing with the Securities and Exchange Commission (the "Commission") of the

Prospectus Supplement, dated May 3, 2001 (the "Prospectus Supplement"), to the

Prospectus, dated December 2, 1998 (the "Prospectus", and together with the

Prospectus Supplement, the "Final Prospectus"), relating to the issuance and

sale of 10,500,000 shares of 7.80% Trust Issued Preferred Securities

($262,500,000 aggregate liquidation amount) (the "Preferred Securities"). The

Preferred Securities will be issued in accordance with the provisions of the

Amended and Restated Trust Agreement (the "Trust Agreement"), dated as of May

10, 2001, among the Company, as Depositor, The Chase Manhattan Bank, as Property

Trustee, Chase Manhattan Bank USA, National Association, as Delaware Trustee,

the Administrators named therein, and the several Holders (as defined therein).

The Final Prospectus is included in the Registration Statement on Form S-3

(Registration Nos. 333-66861 and 333-66861-01), as amended to the date hereof

(the "Registration Statement"), filed with the Commission under the Securities

Act of 1933, as amended, to which this opinion letter is an exhibit.



In rendering the opinion set forth below, we have examined and relied upon the

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