UPDATE 2-Bear sees a $200 mln muni loss, $88 mln write-down

(Recasts with separate filing on Bear Stearns business fall-off in days before merger)

NEW YORK, April 11 (Reuters) - In the days after Bear Stearns Cos BSC.N agreed to be bailed out by JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz), it had by then seen its meat-and-potatoes trading activity fall by more than half and much of its other income slip away, the investment bank said in a filing late Friday.

In a separate filing, Bear said it will probably incur $288 million of losses in the second quarter stemming from a municipal bond program and a write-down. Bear did not indicate how large its total losses in the quarter might be.

After seeing its trading partners vanish and its liquidity dry up, Bear Stearns agreed on March 16 to be acquired by JPMorgan Chase & Co.

By March 24, institutional equity and fixed income commission and sales activity had plummeted to well below 50 percent of their levels in 2007 and in the first quarter of 2008, the company said in a filing with the Securities and Exchange Commission.

Customer margin balances were off 23 percent from Nov. 30, at $66 billion. Customer shorts fell to $66 billion, down from $88 billion at the fiscal year end.

Assets under management fell to $36 billion by March 24, down 20 percent from $45 billion at fiscal year end.

"As a result, the franchise has experienced substantial deterioration of its earnings capacity," the company said in the filing.

JPMorgan agreed last month to acquire Bear in an all-stock transaction first valued at $2 per share, then raised to $10 per share. The acquisition is expected to close by June 30.