The New York Times goes above the fold on A1 with a major scoop that JPMorgan Chase is discussing quintupling its $2 bid for Bear Stearns to help the deal go through with ticked-off shareholders of the No. 5 Wall Street firm. Lots of great detail in this one.

The Times says the Federal Reserve, which essentially put the deal together by guaranteeing $30 billion in shaky debt (or “Bear scat” as we like to call it), is sketched out by the higher price. It fears it will look even more apparent to taxpayers that it’s bailing out Wall Street.

The NYT also breaks the news that JPMorgan is in talks with the Fed to assume at least the first $1 billion in losses on that $30 billion. Add that to a quintupled price and JP’s investment is getting pretty big now—about $2.2 billion, compared to the original $236 million, assuming the likelihood that the debt does indeed go bad.

In a fascinating detail, Andrew Ross Sorkin reports that one of the reasons for the talk of a higher price is that mistakes were made in drawing up the contract in the haste to get it done last weekend before opening bells in Asia.

One sentence was “inadvertently included,” according to a person briefed on the talks, which requires JPMorgan to guarantee Bear’s trades even if shareholders voted down the deal. That provision could allow Bear’s shareholders to seek a higher bid while still forcing JPMorgan to honor its guarantee, these people said.

When the error was discovered, James Dimon, JPMorgan’s chief executive, who was described by one participant as “apoplectic,” began calling his lawyers at Wachtell, Lipton, Rosen & Katz to seek a way to have the sentence modified, these people said. Finger pointing over the mistakes in the contracts began as bankers blamed the lawyers and vice versa.

Sorkin also reports that Dimon has said privately he would “send Bear back into bankruptcy” if shareholders don’t agree to the deal but advisers have told him to tone it down.

The Times gives us a peak inside a crumbling institution, a den of alpha-dog thieves reduced to blubbering and tilting at windmills:

Inside Bear, the vitriol over that bargain-basement price was palpable last week. Bear employees own more than a third of Bear’s stock, and many longtime employees faced the prospect of losing all their savings. On Monday, some were seen crying in the hallways of the firm’s Midtown Manhattan headquarters.

One employee started a Web site to rally opposition to the deal. Some employees said they talked back to their new supervisors from JPMorgan, which commandeered desks and conference rooms after being given operational control of the firm last week.

Meanwhile Bear’s board is machinating to hand the company over by selling 39.5 percent of the stock to JPMorgan, which would then need to convince just one in 10 shareholders to sell in order to take over the company. The NYT says such a board move could draw lawsuits.

Regulatory weak spot, indeed

The Wall Street Journal leads its page one with a story on how the regulatory climate is shifting in favor of more oversight for the first time in nearly three decades. And what is it worried about most? The “potentially costly challenge to business.”

The WSJ ticks off a list of areas that have seen problems lately: lead-paint toys from China, contaminated drugs from China, bum beef and spinach, as well as arcane financial instruments. Even the don’t-touch-it Bush administration and its bedfellows see the (at least political) necessity of increased regulation:

When lawmakers return from their spring recess March 31, they plan to begin work on what could be a sweeping overhaul of the financial regulatory system. Under the current system, responsibility is spread across at least eight agencies, an arrangement Securities and Exchange Commission Chairman Christopher Cox last week called “nearly irrelevant to today’s market”…

“Obviously the crisis in the subprime [mortgage] market has revealed a regulatory weak spot,” said David Chavern, chief operating officer of the U.S. Chamber of Commerce.

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.