The Times says the short-term, no-bid contracts are “unusual for the industry” and beat out those from companies in Russia and China. We’re sure these deals are absolutely on the up and up.

There was suspicion among many in the Arab world and among parts of the American public that the United States had gone to war in Iraq precisely to secure the oil wealth these contracts seek to extract. The Bush administration has said that the war was necessary to combat terrorism. It is not clear what role the United States played in awarding the contracts; there are still American advisers to Iraq’s Oil Ministry.

Sensitive to the appearance that they were profiting from the war and already under pressure because of record high oil prices, senior officials of two of the companies, speaking only on the condition that they not be identified, said they were helping Iraq rebuild its decrepit oil industry.

The Times says it’s potentially a black-gold mine for oil companies at a time when they’re having trouble getting access to big oil fields and when prices are at record highs. But it notes the security “nightmares” that await the companies. It buries too low in its story information that these firms aren’t the first to get oil contracts since the war started.

Regional banks still heading down, down

In credit-crisis land, the Times in a C1 story on the woes of regional banks in general says things are going to get worse for many of them. Fifth Third Bancorp says it will raise capital, slash its dividend, and sell assets to help it deal with a wave of bad loans (the Journal reports this on C3). Its shares got trashed, down 27 percent.

Investors are worried that the banks are going to get hit by their heavy exposure to commercial real-estate loans (which include lots of condo construction loans), and that their shares are going to be devalued by the fact that they must raise capital to stay afloat—check out the NYT’s nifty share-price chart. The paper has our Goth Kid’s Diary Quote of the Day:

“You are in this death spiral of dilution,” said David Ellison, the chief investment officer of FBR Funds, a mutual fund company based in Arlington, Va. “It’s this toxic math.”

Meanwhile, Thornburg Mortgage said the Securities and Exchange Commission issued it subpoenas in an investigation of its accounting and that its ability to stay in business is “in doubt,” the Journal reports inside its Money & Investing section. It wouldn’t be unusual. Reuters says more than 100 lenders have gone bust or gotten out of the business in the last year and a half.

Hedge fund head John Paulson said the credit crisis could get much worse, with total losses reaching $1.3 trillion, more than three times what have been realized so far, the FT reports. Why should he be listened to? He made $3.7 billion last year predicting the subprime collapse.

That other Paulson, the Treasury Secretary known as Henry, will call for more power sooner for the Federal Reserve in a speech today, the Journal says on A3.

And for my next trick…

The Journal says on C1 that banks are rewriting the way they classify which loans are nonperforming in order to make themselves look healthier.

From lengthening the time it takes to write off troubled mortgages, to parking lousy loans in subsidiaries that don’t count toward regulatory capital levels, the creative maneuvers are perfectly legal.

Yet they could deepen suspicion about financial stocks, already suffering from dismal investor sentiment as loan delinquencies balloon and capital levels shrivel with no end in sight.

Pretty friggin’ brutal, indeed

Morgan Stanley’s first-quarter profit plunged 60 percent from a year ago, due mostly to asset sales, the Journal says on C1 and the Times on C4. Its chief financial officer was admirably forthright:

“The truth of the matter is this is pretty frigging brutal.”

The FT focuses on news that a rogue trader cost Morgan Stanley a $120 million in revenue write-downs in the quarter after it caught him inflating his positions’ value.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at