Lehman Brothers troubles deepened as it projected it would lose $2.8 billion in the second quarter—far more than already dour expectations—and announced it will dilute existing shareholders by 30 percent with a more-than-expected $6 billion in new capital. Financial stocks in general, and Lehman in particular, got hammered again yesterday, with the latter tumbling nearly 9 percent.

The Wall Street Journal says in the headline of its A1 story that the news “intensifies credit jitters,” though it emphasizes, as it has in recent days, that Lehman doesn’t face a Bear Stearns-like collapse of confidence, if for no other reason than the Federal Reserve’s backstop of liquidity. But as a signal of what still lays ahead for other banks, it’s not good, as The New York Times says on C1.

Analysts and investors who had been hoping the worst was over now seem resigned to a different reality—one that likely includes more bad loans, souring securities and much-needed capital infusions in the coming months.

The Journal writes that once the losses end, it’s still going to take a long time to get back to its earlier levels of profitability because much of the securitization business that brought in huge fees is gone and the company won’t be able to goose returns by leveraging up with nearly as much debt.

BS from the bosses

The Financial Times on page one quotes Lehman chief financial officer saying that the banks didn’t really need all the new money, it just wanted to “end the chatter about Lehman Brothers and let us get back to business.” Yeah, right. That kind of talk leads the WSJ and NYT to report that investors and analysts are questioning management’s credibility. We’d say so. If they don’t need the money but are diluting existing share value by 30 percent, shareholders ought to riot in the streets.

The FT’s Lex column sarcastically dismisses the CFO’s beyond-dumb argument and reports that by one estimate Lehman still has $65 billion in mortgage and leveraged loan debt just waiting to be written down. And the Journal’s Heard on the Street column calls BS on Lehman too, saying it is “far from out of the woods,” and gets the Quote of the Day:

And Lehman’s most-vocal critic, David Einhorn, manager of hedge fund Greenlight Capital, who has been short the stock, betting it will decline, remains dissatisfied. “They just raised $6 billion of capital that they said they didn’t need, to replace losses they said they didn’t have.”

In a separate Money & Investing cover story, the WSJ writes that Lehman’s loss came partly (the firm wouldn’t say how much) from two big commercial real-estate deals it made at the market peak.

Washington Mutual shares plummeted 17 percent to a sixteen-year low on an analyst report that predicts $27 billion in losses by 2011.

In death, as in life…

The Journal culls the securities filings to come up with a humdinger of a page-one article this morning. It’s another outrageous executive-compensation story—this one concerning “golden coffins,” which many execs (or more precisely, their estates) are due to get if they die in power.

The Journal unfolds a list of outrageous work-arounds for dead heads, including “severance,” non-compete clauses, and just flat out continuing to get paid for years after dying. The paper uses the particularly egregious package due Nabors Industries CEO Eugene Isenberg if he croaks—not all that unlikely since he’s seventy-eight. Dying gets his estate a so-called “severance” payment of $264 million, more than an entire quarter of profit for the firm. But there are plenty of other good anecdotes in here.

The CEO of Shaw Group gets a $17 million non-compete contract if he hits the pearlies, and Lockheed Martin’s chief took a million-dollar death payout even though he’s still very much alive. Perhaps more egregious is the Roberts family’s looting of Comcast. The estate of the father, who is on the board, and his wife stands to get $130 million when they kick over. The estate of the son, who is CEO, will get some $297 million if he dies.

The WSJ is getting this data because of strictures the Securities and Exchange Commission put in place a year and a half ago that allow more scrutiny of executive pay.

Companies often say one goal of their pay packages is to keep executives from leaving. But “if the executive is dead, you’re certainly not retaining them,” says Steven Hall, an executive-pay consultant in New York.

The Journal quotes a study of big companies that found 17 percent of them had severance-style death benefits and 40 percent paid for CEOs’ life insurance. And it’s not like these folks haven’t been getting magnificently wealthy while they’re still upright. Isenberg’s reaped half a billion bucks in the last fifteen years, for instance.

Solid enterprise reporting by the Journal.

Join the global economy! Starve to death!

The Journal and the NYT both go page one with farm stories today.

The Journal posts a very interesting look at a big oops! by free-traders who now say they may have been wrong for telling poor countries not to invest much in growing their own food since others could do it more cheaply.

Now, with grain stocks depleted, China and India gobbling food as never before and food prices soaring, many poor countries are turning their back on the old ideas and installing government programs designed to support local farmers. These include cash subsidies to poor consumers, increased efforts to improve local seed varieties, and government-sponsored handouts of fertilizer and seeds…

A growing number of World Bank economists are now convinced most poor nations need a healthy farm sector as the basis of a robust economy. The manufacturing booms that swept Asia only happened after the region’s farm sectors developed. And new research shows that investing in agriculture lifts more people out of poverty much faster than long thought.

This goes to the heart of the problem with free-tradeism. Countries should be as self-sufficient as possible. Relying on others to supply your needs is a recipe for disaster in times like these when it’s every man for himself.

Nations appear to be figuring that out—at least where food is concerned. The Journal says “food security has become a matter of national security.”

The Journal’s story reads like yet another malpractice case by the rich countries against the poor ones. Haiti used to be mostly self-sufficient in rice production, but it cut its tariffs on imports and its “rice bowl” was “nearly wiped out” and the country is now the biggest importer of the grain per capita.

Planting-season woes signal bad moon rising

The NYT says the planting season has gotten off to a poor start given that it must produce lots of food to stave off shortages. It says “some farmers are starting to fear disaster” largely due to too much rain in the corn belt.

Last year, the rice crop in Arkansas yielded a record 160 bushels an acre. This year, experts there say, 150 bushels will be an achievement.

“There’s no doubt about it, we’re not going to have the rice to export,” said Carl Frein of Farmers Marketing Service in Brinkley, Ark. “Poor countries like Haiti, I don’t know what they’re going to do.”

Fed knocks some Wall-Street heads

The Federal Reserve made a bid to clear up the mess that is the derivatives market by calling in major banks and hedge funds for a powwow on how to find a quick-fix, the WSJ and NYT say on their respective C1’s. The Times says it’s meant to assure that the failure of any financial institution doesn’t threaten to melt down the entire system, as nearly happened in March with Bear Stearns.

The parties discussed creating a clearinghouse for trades.

The Times:

Because no central clearinghouse currently exists for derivatives trading, a default by a major party could lead to cascading losses at big banks and brokerage firms. Fears about this so-called counterparty risk have rattled nerves on Wall Street amid a worsening credit crisis.

The Journal notes that it’s not the first go-round for this. The Fed called Wall Street in in 2005 for a similar meeting.

Bernanke warned of serious inflation risks, sending bond markets into a tailspin. Two-year Treasury bonds yields (which rise as prices fall) rose the most in twelve years.

Ewwww!

Lots of business and economic news on the cover of the Times today, including one of the dumber articles we’ve seen on its page one in some time: a trend story about more women buying smart phones these days. Stop the presses!

The story is pegged to the unveiling of the new iPhone, which just makes it worse.

Revelations include: Women like sleek phone designs! Many women say they like multimedia features! Females like pink!

This quote is about all you need to know about the tone of the piece:

“Ewww,” she said. “I never thought about it. Really? If I could only have one?” Minutes passed as Ms. Newman weighed the pros and cons of each. Finally, she said, “I guess if I wasn’t using the BlackBerry for work, I’d have an iPhone.”

Ewww, indeed.

First, take this grain of salt

In economic news, pending home sales hit a six-month high in April, the Journal says on A6, though it notes the number may “overstate strength because of sales cancellations.” It quotes the always-sunny National Association of Realtors economists as saying “bargain hunters have entered the market en masse.”

An indicator of job trends hit the lowest in four years.

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 rc2538@columbia.edu.