The FT says on page one that investors are betting that interest rates are more likely to rise by October than not. That is a signal of some economic confidence, but it’s also driven by oil costs. Higher interest rates will delay any recovery in housing.

But the WSJ in its C1 Ahead of the Tape column notices some warning signs among the Wall Street banks that it says may show the credit-crunch fun isn’t done. Their falling stocks and rising cost of credit protection aren’t good signs.

The story behind $2 a share for Bear

The Journal concludes its “Fall of Bear Stearns” mini-series by looking at the firm’s final days, when the paper says it nearly collapsed twice, hours after it thought it had gotten a month-long reprieve.

JPMorgan Chase yanked back its offer at one point on the morning the deal was signed after it got “cold feet” from looking at Bear’s books. It came back with an offer of $4 a share, but Treasury Secretary Paulson told CEO Jamie Dimon it was too high. That’s where the famous $2 a share offer came from, just hours before what would have been a devastating opening bell in Asia.

Bear Stearns investors took their lumps, if not as painful as Mr. Paulson had envisioned. The Fed got stability in the markets, but at a risk of tens of billions of dollars and by setting an uncomfortable precedent. And J.P. Morgan picked up prized clients, talented Bear Stearns employees and a sleek new building at a bargain price, but now faces at least $9 billion in liabilities and the chore of integrating two wildly different cultures.

But the Dow did not plunge 2,000 points, other trading houses did not fail and the global financial system, while wheezing, did not collapse.

Free wireless for all!

The Federal Communications Commission is proposing that whoever wins its big auction of airwaves be required to give free wireless Internet to the entire country, the WSJ says on A4. Wireless companies oppose the plan, of course, but it also has other doubters.

Early skeptics of the plan note that the FCC’s last attempt to place strict conditions on an auction didn’t work out very well. Earlier this year, wireless companies spent upward of $20 billion to buy airwaves that will be left vacant in 2009, when the U.S. transitions to digital-only television broadcasts. But bidders stayed away from one block of airwaves, which the FCC had set aside to be shared with police and firefighters.

Bellwether bid for Weather Channel

The FT says a buyout bid for the Weather Channel shows how much has changed in deal-land in the last year. The bid by NBC Universal, Bain Capital, and Blackstone Group, will be somewhere between $3 billion and $4 billion, but more than half of that will be equity.

During the credit bubble, companies often put up about 15 percent in equity, it says, though some real estate deals were at 5 percent or less.

Time Warner is also bidding for the weather station.

Countrywide prez gets canned

Bank of America—finally—said it won’t keep Countrywide’s president after it acquires the sloppy lender, the Los Angeles Times and WSJ report. The exec, David Sambol, will get $28 million for getting pushed out the door.

The LAT has our What Is a Bottle Washer? Quote of the Day, from Senator Chuck Schumer:

“Countrywide did more to contribute to the sub-prime mortgage crisis than anyone else,” Schumer said. “It always amazed me that Bank of America, which has a fine reputation, would want to keep someone who was in effect Countrywide’s chief cook and bottle washer on the scene.”

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