EON

New York - Bear Stearns Cos. (BSC) said it will cut 310 jobs by combining its two mortgage-origination businesses, becoming the second Wall Street investment bank in two days to announce such layoffs amid industrywide retrenchment.

Bear Stearns noted its mortgage-origination business has cut some 40% of its work force since the beginning of the year. The company, which with Lehman Brothers Holdings Inc. (LEH) is a leader in making and securitizing home loans, had already fired dozens of people in its subprime-mortgage unit.

Chief Financial Officer
Samuel Molinaro said last month that further cuts were likely at Bear Stearns.

Lehman, the biggest underwriter of mortgage-backed securities, fired about 2, 500 residential mortgage employees in three rounds of layoffs this summer. Credit Suisse Group (CS) last month said that it cut about 150 residential mortgage jobs.

On Tuesday, Morgan Stanley (MS) announced a restructuring of its residential lending business that will result in 600 job cuts because of lower mortgage origination.
Jeff Walton, who has been leading Bear Stearns Residential Mortgage, will be chief executive of the combined mortgage operation. Encore Credit chief Shabi Asghar will be president.

Bear Stearns plans to increase its mortgage offerings, said
Tom Marano, global head of mortgages, rates and foreign exchange. That includes offering Fannie Mae (FNM), Freddie Mac (FRE) and Federal Housing Administration loans. “These additions will increase our capabilities and further allow our brokers to select the products that best meet their customers’ needs,” he said.

Wall Street until recently has minted money from packaging mortgages into securities for investors looking for high returns. The business crashed in the summer after rapidly growing defaults and delinquencies by borrowers with weak credit histories caused the value of securities backed by mortgage payments to plummet.

Shares of Bear Stearns were recently down 70 cents at $127.87.