Will financial reporting ever have a Woodward and Bernstein, the two metro desk Washington Post reporters who broke the Watergate Scandal? After attending last night's panel on Financial Journalism Under Fire: Did We Do Our Job?, hosted by the New York Financial Writers Association, the answer is clear: no. (Changes may and should happen, and I'll touch on a few of those).

I have a theory that if you took a psychological assessment of a sports writer, a political reporter, and a financial writer to see who was the most cynical, the answer would most definitely be the financial writer. They're reporting on an industry ruled by greed and people who make more money in a year than they'll see in a lifetime. The system is just too large, too shady, and too encouraged to be bad in the name of profits (deregulated) that reporting on any of this would be best reserved for some hippie outlet like Mother Jones, not the respectable Wall Street Journal. Big scoops in finance usually involve mergers and acquisitions, company and exec failures -- going after anything else is cute idealism. (In fact, someone last night compared it to steroids and baseball -- you don't want to know where those home runs are coming from, you just want to enjoy the game).

The subprime mortgage mess took yet another victim as Bear Steams (NYSE: BSC) reported its first loss as a public company when it was forced to write down $1.9 billion dollars in investments related to subprime mortgages, according to Bloomberg. Analysts expected a much lighter hit. This loss is $1.2 billion more in write-downs than predicted.

Bear Steams also was hit harder than its chief rivals Citigroup (NYSE: C), Morgan Stanley (NYSE: MS) and Merrill Lynch (NYSE: MER) on the trading side so overall revenue for the fourth quarter resulted in a net loss of $854 million or $6.91 per share. A year earlier fourth quarter results were a net income of $563 million, or $4 per share. Bear Stearns is the second-largest underwriter of U.S. mortgage bonds and it paid dearly for that lead role.

Bloomberg said the firm underwrote $7.3 billion of U.S. bonds, which was 17% less than last year and it managed just $1.18 billion in equity offerings, a 28% decrease. Yet Sanford Bernstein analyst Brad Hintz does see a rainbow at the end of this cloud. He told Bloomberg that he believes that we're heading into a recession and that's when traditional investment banking activities, such as mergers and acquisitions slow, while cuts in interest rates can help Bear's bond business. So Bear could benefit from the recession that's now looking more and more likely.

Since the loss was much greater than anyone predicted, expect the stock to fall today, but early trading made the stock price look like a yo-yo going up and down.

Whether what a CEO does in his spare time is important or not, The Wall Street Journal gives the impression that Bear Stearns (NYSE: BSC) chief James Cayne spent too many hours golfing and play bridge when two of the firms hedge funds were in trouble this summer.

The news about Mr. Cayne spending hours out of the office during the problem period in July is already well-known. But in the lead story at the paper's online edition, reporters for the paper write about Cayne's schedule, his habit of not having his cellphone with him at certain times, and rumors that he smokes marijuana to relax.

The paper also reports that when the hedge fund crisis was at its worst "Mr. Cayne left for Nashville to play in the bridge tournament, accompanied by his wife, Patricia, who is a neuropsychologist and another avid bridge player." He stayed in the city for most of the next ten days.

The WSJ wants to make a virtue out of playing detective, which is fine, but whether it helps shareholders in Bear Stearns is another question.

CEOs of large companies often leave the management of problems in the hands of other senior executives. There is too much activity and too many problems to go around for one person to spend close to full-time on any one. Whether Mr. Cayne did or did not allocate his time correctly during the failure of two of the investment bank's hedge funds will always be a matter of conjecture.

What is certain now is that history will re-write the roles of people like Cayne and Merrill Lynch (NYSE: MER)'s Stan O'Neal. They will be cast as villains. And perhaps they should be. But playing bridge during a crisis is never going to look good.

Douglas A. McIntyre is an editor at 247wallst.com.

Chinese investors feel that they got burned when they took a stake in big private equity firm Blackstone (NYSE: BX). That IPO did not do well, so the disappointment is understandable.

But the Chinese may be back. According to a report in the FT, the China Social Security fund, which manages over $62 billion in assets, has its eyes on KKR, Carlyle, and TPG. The fund is interested in a stake of 9.9% in at least one of the companies. The British newspaper quoted one analyst on the potential investment: "'China's interest in buying into overseas financial intermediaries is clearly part of a deliberate strategy,' said Isaac Meng, an analyst with BNP Paribas in Beijing. 'The government is hoping to do a better job in exporting its capital than the Japanese did in the 1980s.'"

That may all be well and good, but members of the US Congress are already concerned about the investment of China's Citic Securities in Bear Stearns (NYSE: BSC). It is unclear how such an investment would compromise US interests, but Congress could try to block these deals on the grounds that large investment and LBO firms control a huge portion of the investment capital in the US. They would not want any Chinese influence in the process.

The Congressional posturing on the matter is a red herring, but meddling by the federal government could simply make the Chinese wary of moving capital into the US. If Congress leaves the matter alone, Wall Street firms are likely to have Chinese shareholders.

Douglas A. McIntyre is an editor at 247wallst.com.

Chuck Prince, CEO of Citigroup (NYSE: C), needs a few friends. Not the kind he can go fishing with.

Prince's job may be on the line now that Citi has announced that its Q3 profits will drop 60% from last year. According to MarketWatch, the bank blamed "dislocations in the mortgage-backed-securities and credit markets, and deterioration in the consumer-credit environment."

Prince finds himself in a position not unlike that of James Cayne, the head of Bear Stearns (NYSE: BSC). Both financial institutions now have taken very big hits on their watches. Both can blame subordinates, but that may not cut it with their boards or public shareholders.

What saves them? For starters, UBS (NYSE: UBS). The Swiss bank has just reported similar problems in its fixed income portfolio. If the bad news spreads to Bank of America (NYSE: BAC), Lehman (NYSE: LEH) and other global money center banks and investment firms, Prince may be viewed as a victim of a train wreck that almost none of the large firms could avoid. He will, in essence, look as stupid as all of his peers.

Douglas A. McIntyre is a partner at 24/7 Wall St.

TheStreet.com's Jim Cramer highlights the latest example of how people were scared out of the market at exactly the wrong time so you won't get spooked next time.

When Sowood and the Bear Stearns (NYSE: BSC) (Cramer's Take) leveraged investment funds blew up this summer we were supposed to get ready for a wave of redemptions that would buckle the market.

"Just wait until October" became a familiar refrain as hedge funds were expected to get shelled, causing tons of stocks not to trade the way they should as unnatural margined selling took its toll.

But here we are in the first week of October and spreads for arbitrage, a pure tell for fund redemptions, are tightening, not loosening. The averages are at or are close to hitting new highs and we haven't heard of any funds about to go belly-up. The only ones that would fail, I believe, would be short funds.

I bring up this sore but positive topic because when things were really bad at the end of August yet redemptions hadn't overwhelmed the market, we figured it might just be a September phenomenon. Making things a little more likely, too, were the funds that were exposed to all of these exotic instruments based on mortgages.

So far it looks like the huge hedge fund redemptions and failures aren't going to happen, perhaps courtesy of the Fed's rate cuts that now do seem to have bailed out a lot of managers who have made wrong moves. That's the "moral hazard" that everyone was fretting about so much before the Fed acted.

But I think that instead, you should let this memory of "redemption worry" be a reminder of the phantoms that freak people out and make them leave the market at what now represents 1,000 points on the Dow.

Oddly, there are still some stocks that seem pressured down more by fear than by fundamentals. Genesis Lease (NYSE: GLS) (Cramer's Take) and Aircastle (NYSE: AYR) (Cramer's Take) both have terrific yields, a function of the decline in the stocks of aircraft lessors. Some of these are owned from hedge funds believed to be struggling. The other is Enterprise Product Partners (NYSE: EPD) (Cramer's Take), also with a good yield, that is in the energy transport business.

Neither industry is hurting but the stocks had some really weak hedge fund hands as shareholders.

These could be payoffs from the distressed period and redemption fears that drove them down.

RELATED LINKS:

• What All Women Should Know About Retirement
• Top Rocket Stocks for the Week of Oct. 1

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Citigroup.

TheStreet.com's Jim Cramer explains why lousy results from a U.K.-based firm bode well for American companies this reporting season.

Tate & Lyle's loss is our gain. That's the only way to think about the big decline in that U.K.-based sugar producer's stock this morning on news that the currency translation from dollars to pounds will kill it.

The declining dollar is going to make some of these earnings in the next few weeks jump off the chart. They will be so much higher than people think they will be for the big exporters, particularly those to Europe (we don't have much to go to Japan) that you are going to be blown away.

The big litmus test this earnings reporting period will be the exposure to these foreign currencies. We fret every day about the dollar, but it is a little ridiculous at this point -- meaning the currency is way too low.

Nevertheless, a Procter & Gamble (NYSE: PG) (Cramer's Take) will kill the numbers, so will a Coca-Cola (NYSE: KO) (Cramer's Take). I know these are at 52-week highs, but we are now going to have to start looking at stocks that haven't gone up that much this year. Take PG; it's only up 9%. That gives it some room. Same with Colgate (NYSE: CL) (Cramer's Take). Those still worth betting on; they can still run.

Oh, and don't forget, for the purposes of next quarter, Goldman Sachs (NYSE: GS) (Cramer's Take) will have more than 50% in earnings overseas. The firm is not going to report for while, but that's still another reason to own it -- and another reason to expect that a foreign company will take a stake in Bear Stearns (NYSE: BSC) (Cramer's Take) before long despite the Buffett denial. If a stake is taken, I doubt it will be domestic.

RELATED LINKS:

• Jim Cramer's Portfolios of the Week
• Cramer: Ignore Wal-Mart's Drug Press, Buy CVS

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Goldman Sachs.

TheStreet.com's Jim Cramer explains a prudent buying technique to use when the market has gotten a lot better fast.

Is it too late to get into a Caterpillar (NYSE: CAT) (Cramer's Take) or a Goldman Sachs (NYSE: GS) (Cramer's Take)? How about a Bear Stearns (NYSE: BSC) (Cramer's Take) or an International Game Technology (NYSE: IGT) (Cramer's Take)?

The answer to individual stocks is that if they havae had a huge run, you have to be careful about getting in. Goldman Sachs deserves to sell off, given its recent run. That statement is not indicative of whether there are skeletons in the closet or that Goldman didn't mark securities right. It has to do with not being a pig.

I feel the same way about CAT, which was at $70 not that long ago. Same with many of the banks. It is difficult to buy here.

That said, I think that there are more gains ahead, so what's the point of waiting?

Next week is an important week as Lehman Brothers (NYSE: LEH), Goldman Sachs (NYSE: GS), Bear Stearns (NYSE: BSC) and Morgan Stanley (NYSE: MS) all report the results of their respective August 31 quarter end. Giant Merrill Lynch (NYSE: MER) reports later in October as its quarter ends September 30, but signaled today that sub-prime credit issues would obviously weigh down the financial results. The reason Merrill Lynch "spoke up" about the issue now is that it is about to close on the First Republic Bank acquisition.

The issue for these five major brokerage firms is not the condition of the August 31 quarter and Merrill's September 30 quarter. Consensus thinking is the results will be lousy at best. The principal issue will be to look at balance sheet damage and more importantly, guidance going forward.

The five big firms will survive this crisis as they have historically survived other crises. The point investors want to draw from hard, real numbers will be the outlook for these credit market obligations. Is the bleeding finished with? Is there more to come? One has to be careful not to confuse adjustable mortgages that are re-setting over the next 18 months with the underlying credit obligations supporting those loans. Two different issues.

Intel (NASDAQ: INTC) volatility at 31into increase of third quarter revenue guidance.

• INTC is recently trading up $0.25 to $25.72 (12:32 p.m.).
  
• INTC says, "as a result of stronger than expected worldwide demand for its computing products, INTC now expects revenue for the third quarter to be between $9.4 billion and $9.8 billion as compared to the previous rang of $9 billion to $9.6 billion."
• INTC will report EPS on 10/16.
  
• INTC October option implied volatility of 31 is above its 26-week average of 28 according to Track Data, suggesting slightly larger risk.

Bear Stearns (NYSE: BSC) volatility Elevated prior to Aquarian announcing 6.97% positions.

• BSC is recently flat but originally was up $3.05 to $108.16 when the Dow Jones reported that Aquarian Investments is holding a 6.97% stake in BSC for investment purposes.
  
• BSC overall option implied volatility of 59 is above its 26-week average of 42 according to Track Data, suggesting large price movement.

Volatility Index S&P 500 Options-VIX up 0.46 to 26.69; 10-day moving average is 23.95.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Goldman Sachs (NYSE: GS) volatility trending lower after last week's spike. GS closed at $177.89. GS September option implied volatility of 40 is below of level of 60 from last week but still above its 26-week average of 33 according to Track Data, suggesting larger price fluctuations.

Bear Stearns (NYSE: BSC) volatility trending lower after last week's spike. BSC closed at of $114.75. BSC September option implied volatility of 59 is below a level of 72 from last week and still above its 26-week average of 40 according to Track Data, suggesting large price movement.

Lehman Brothers (NYSE: LEH) volatility trending lower after last week's spike. LEH closed at $58.54. LEH announced the closure of its subprime brokerage unit, BNC Mortgage, on 8/22. LEH September option implied volatility of 54 is below a level of 75 from last week and still above its 26-week average of 38 according to Track Data, suggesting large risk.

Volatility Index S&P 500 Options-VIX at 22.88; 10-day moving average is 27.49.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Wednesday the market spiked 150 points at the end of trading. Thursday, it rose 100 right before trading closed. But today that trick didn't work -- instead the Dow fell about 281 points, according to AP.

AP's explanation is that S&P downgraded the debt of The Bear Stearns Companies, Inc. (NYSE: BSC) because of its exposure to the distressed mortgage and corporate buyout markets. And its Chief Financial Officer Sam Molinaro, described conditions in the credit market as the worst he'd seen in more than two decades.

Similarly bad credit news has been around the markets for weeks. But earlier in the week the market spiked at day's end, as I noted above. Today, not so much. Nobody really knows, except the traders, but my guess is that hedge funds have expected this bad credit market news to tank the market so they shorted it. When the market did not drop as much as expected, they decided to cover their short positions before the close of trading. This last minute buying drove up prices.

Maybe today the hedge fund managers left for their 5,000 acre Hampton estates early. So there was no short covering at the end of the day to give the market a pick me up. Something to think about as you cut your grass this weekend.

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Bear Stearns.

Bear Stearns Companies, Inc. (NYSE:BSC) has jumped on the exchange traded funds (ETF) bandwagon, and will be launching its own actively-managed fund, the Current Yield Fund. If approved, the fund will invest in money market and short-term debt, including US bonds, foreign debt, and corporate bonds. According to the prospectus field with the SEC, "Unlike an 'index fund' which seeks to achieve, as closely as practicable, the total return of the securities comprising a specified market index, the Fund will be actively managed by its portfolio manager. In other words, the portfolio manager will have discretion to choose securities for the Fund's portfolio consistent with the Fund's investment objective."

Analysts predict that if this fund launch is successful, Bear Stearns will move to launch other actively-managed ETFs. Should you take a look at the Current Yield Fund? Probably not. Actively managed funds are nearly always inferior to passive index funds (especially bond funds), and ETFs will always be most attractive in their original form: as passively managed index funds that are easy to trade.

Goldman Sachs Group Inc. (NYSE:GS) reported a 29% gain in first-quarter profit, handily beating analysts' forecasts and investors probably could care less. Wall Street is waiting on pins and needles to find out whether the largest securities firm escaped the black hole engulfing suprime lenders.

As Bloomberg News notes, Goldman Sachs is a lender to New Century Financial Corp. (NYSE:NEW), the suprime lender that can't pay its creditors. Shares of the Goldman have slumped 8.3% since February 20 amid concerns that the real estate market will fall because of higher interest rates resulting in a slowdown of the economy, Bloomberg said.

Not suprisingly, New Century shares were halted yesterday after plunging nearly 90% last week. Another subprime lender Accredited Home Lenders Co. (NASDAQ:LEND) plumetted 27% yesterday and plunged another 43% in pre-market trading.

Suprime lending is bound to come up over the next two weeks when Bear Stearns Cos. (NYSE:BSC), Lehman Brothers Holdings Inc. (NYSE:LEH) and Morgan Stanley (NYSE:MS) report earnings.