If so—and Mr. Thain would not comment when I asked him about it—the optimism was misplaced. On Thursday, Merrill announced an additional $6.5 billion in new write-offs.

The Times in a C6 news story has an amazing comment from the man himself. It’s our Where’s Your Flack? Quote of the Day:

He said the reputation of Wall Street had not been harmed by the credit crisis as much as it was after the technology bubble burst.

“It’s not like these securities were foisted on poor investors in Iowa,” Mr. Thain said about the toxic mortgage bonds that have cost his bank so dearly. “It’s not as bad as 2001 because, for the most part, Wall Street has suffered the most.”

While there’s certainly truth to the second part of his statement—though we’ll argue that Wall Street hasn’t suffered enough for its sins—it’s simply untrue that the sins of his bank and Big Finance in general didn’t affect “poor investors in Iowa” as he implies.

Remember this in Florida? How about Norway?

Rest assured, Wall Street’s reputation is taking as big a hit as it did in the tech bust.

Libor lie, updated

The WSJ on C1 follows up on its page-one story this week about Libor possibly being manipulated. It’s got more evidence that banks were indeed lying about their interest rates—lowballing them to make it look like they’re in better financial condition than they really are.

On Wednesday, the British bank group that oversees Libor, a measure of how much banks charge to lend to each other and one that’s critical to the operations of financial markets, said it will hurry its investigation into possible manipulation. A day later, Libor had its biggest one-day spike in eight months.

The move by the BBA, which oversees Libor, came amid concerns among bankers that their rivals were not reporting the high rates they were paying for short-term loans for fear of appearing desperate for cash…

If sustained, the jump could mean higher debt payments for homeowners, companies and others. Libor serves as the basis for interest rates on trillions of dollars in floating-rate corporate loans and mortgage loans. Libor rates are also used in hundreds of trillions of dollars in derivatives contracts, such as the interest-rate swaps companies and investors use to protect themselves against sudden shifts in the relationship between short-term and long-term interest rates.

This is definitely still a story to watch.

Delusions of recovery

The Wall Street Journal on page one notices a “split” so far this earnings season between banks and consumer-focused companies and those that are more business-to-business and multinational.

With one in five of the Standard & Poor’s 500 companies having reported, overall earnings are down 22 percent. But at non-financial companies earnings are up more than 8 percent.

The WSJ says some analysts are predicting a big bounce-back in the second half, as consumers return to buying “consumer cyclicals—such as cars or home furnishings.”

But where is this money going to come from? Who’s predicting that the housing market has hit bottom? Liberal economist Dean Baker says three trillion dollars of housing wealth has evaporated so far and that that will double by the end of 2008. He’s a bear, but let’s say he’s wrong by half. That’s still $1.5 trillion wiped out in the next eight months, and that will make people feel poorer and inclined to spend less. It seems unlikely to us that non-financial companies are going to make it out of this crisis without suffering at least marginally falling profits at some point.

The Journal says companies are hoping to make it through to the third quarter or whenever the Fed’s interest rate cuts start really making an impact.

All About the Times Co.

The New York Times Company reported a $335,000 loss in the first quarter, and its performance was much worse than expected, which is saying something these days, the NYT says.

Newspaper ads in print and online plummeted nearly 11 percent and the pace of online ad growth slowed to 16 percent from 22 percent a year ago.

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.