The Wall Street Journal kicks off a three-part series on “The Fall of Bear Stearns” with a story, accompanied by comic-book style illustrations, that says the firm missed several chances to save itself.

The missed chances included execs ignoring traders and company wise man Ace Greenberg, who urged them to lower the company’s mortgage exposure; talks with KKR and J. Christopher Flowers to buy big stakes in the firm that would have given it much-needed cash went nowhere because execs turned them down for fear of looking weak. But they were weak—so weak that the Securities and Exchange Commission at one point set up daily briefings with Bear to make sure it had enough cash.

Perhaps the biggest “d’oh!” decision was recommended by Greenberg himself. Bear Stearns actually had a massive bearish bet against the housing sector that it unwound in the fall.

Reporter Kate Kelly, who last year reported that CEO Jimmy Cayne was smoking pot and playing golf while his company burned, continues to unload on him, reporting that he was “particularly angry” that a top executive who oversaw two hedge funds that collapsed that summer was at a bridge tournament with him while they fell. Pot meet kettle. Perhaps Cayne was just mad that the executive won the tournament; anyway, he forced him out when others were less sure he should go.

Applaud the Journal for devoting the resources required for a big series like this. We’re looking forward to parts two and three.

Subprime cars

The New York Times on page one reports that the car industry is getting “sideswiped” by the credit crunch and says “parallels are striking” to the housing bust. The piece jumps off from a page-one WSJ story last week, though the Times is careful to say the pain in the auto business likely won’t be as bad.

Auto lenders and banks, closing their wallets, have prevented hundreds of thousands of consumers from obtaining the financing for a car. Home equity loans, which had been used in at least one of every nine deals, when lenders were more generous, are no longer a source of easy money for many prospective buyers. And used-car prices have fallen nearly 6 percent as repossessed cars and gas-guzzling trucks and S.U.V.’s flood auction lots…

Borrowers are falling behind on their car payments at a rate faster than in other recent downturns. And losses are considerably worse. Auto lenders sustained losses on about 3.4 percent of their loans in the first quarter, a rate about 30 percent higher than in 2002, according to data from Moody’s Economy.com. Even some of the most creditworthy borrowers are stressed.

Just as in housing, the car industry has something called the subprime borrower. The Times says one big subprime car lender has scaled back its lending by more than two-thirds since last year. And areas of the country hit hard by the housing bust are seeing car repossessions soar and financing become more difficult. That’s in no small part due to the fact that in places like California, some 30 percent of new car sales were financed with home-equity loans.

One man’s loss…

In good news for that whole housing-bust thing, the Journal reports on A3 that prices are rising “sharply” in many of the worst-hit markets, as slashed prices draw in bargain hunters. But it’s quick to note:

That doesn’t mean housing is poised for a quick recovery. In much of the U.S., there is still a huge glut of homes for sale, and foreclosures continue to dump more property on the market. Realtors reported that the number of single-family homes on the market in April was enough to last 10.7 months at the current sales rate, the highest since 1985. During the housing boom of the first half of this decade, the supply typically was four to five months.

We’d seen a similar number before and thought it must be a misprint, but the Journal reports that the average sale price in Detroit proper this year is just $20,514, adding a disclaimer apparently for skeptics like us that the “average is so low because many of the sales involve decrepit homes in neighborhoods with few jobs.” That number is down 56 percent from last year and has drawn sales, which are now up 48 percent.

The Journal reports that most of the sales in Detroit are foreclosures that lenders have chopped prices on and says that’s what’s leading to the sales increases in other hard-hit markets. In the Las Vegas area, sales are up 30 percent, while in Sacramento County, they’re up 41 percent.

The NYT on C1 reports on the growing horde of contractors making a living cleaning and fixing up abandoned homes, and avoids the flawed reporting that has plagued other publications—which have bought mortgage-industry explanations about “trashouts” that say as many as half of foreclosed homes are vandalized by their former owners—by saying it’s not clear who damages them.

Sign o’ the times

The Financial Times goes page one with a scoop that private-equity firms Blackstone Group and Apollo Management are talking about buying chemical company Chemtura “in what would be one of the bigger US buy-outs this year.”

That’s a sign of how far private equity has fallen so quickly. Chemtura’s market capitalization is just $2 billion. Toss in its debt and that increases to about $3.1 billion, or less than 8 percent of what Blackstone paid for just one of its deals last year, the Equity Office Properties buyout. Last year, this deal would have barely made the paper, much less hit the front page.

And the FT says the talks have been ongoing for months, but have been “moving slowly not only because of the tight lending environment but also because of its own weak earnings trends.” Still, though the paper doesn’t say it, the buyout talk is a sign that private-equity firms, which have been continued to raising billion of dollars in new funds, have lots of cash.

Truckers’ lament

• 1
• 2