Bear Stearns, on Upswing, Sees No Need to Seek Cash

Executives of Bear Stearns, one of the securities firms hit hardest by the collapse of the subprime mortgage market, said yesterday that it would weather the storm and that it was not looking for a cash infusion from an outside investor.

“Things are getting better” since the Federal Reserve lowered its benchmark interest rate on Sept. 18, Bear Stearns’s president, Alan D. Schwartz, said in a presentation to investors yesterday. “Liquidity has improved.”

Bear Stearns will make managing risks a priority over growth and is avoiding “big directional” bets after reporting its largest quarterly earnings decline in a decade, Mr. Schwartz said. The firm was a factor in the summer’s declines in the credit markets after two of its hedge funds lost .6 billion of clients’ money.

The hedge fund collapse led to the Aug. 5 ouster of the former co-president, Warren J. Spector, 49, who was viewed by analysts as the most likely successor to the chief executive, James E. Cayne, 73. Mr. Schwartz, 57, became sole president.

At the conference, Mr. Cayne said: “I’m confident that Bear Stearns will weather the storm and come out a stronger, more diversified and a greater organization. We’re not looking for an equity infusion.”

Mr. Cayne said he would consider a potential partner only if the deal “brings along geographic, strategic value to us.”

Shares of Bear Stearns fell 67 cents yesterday, to 7.61.

The stock’s 22 percent decline this year is the worst on Wall Street, where Bear Stearns ranks fifth among United States securities firms by market value behind Goldman Sachs, Morgan Stanley, Merrill Lynch and Lehman Brothers.

Bear Stearns said Wednesday that it was cutting 310 jobs from units that originate mortgages.

Securities firms have been eliminating mortgage jobs after record foreclosures sapped demand for bonds backed by home loans.

U.S. Begins Inquiry

Federal prosecutors have begun a preliminary investigation into two Bear Stearns hedge funds that closed over the summer, people with knowledge of the matter said yesterday.

The United States attorney’s office in Brooklyn has requested information about the funds, but did not issue any subpoenas, the people said.

Investors lost about .6 billion when the two funds — the High-Grade Structured Credit Strategies fund and the High-Grade Structured Credit Strategies Enhanced Leverage Fund — failed. Both were heavily invested in securities backed by subprime mortgage loans.