Tuesday morning headlines

Market opens lower: This could be the day when stocks take a breather after five straight up sessions. The Dow is off 65 points after almost two hours of trading.

WSJ had Murdoch scoop: Journal Managing Editor Paul Steiger was told by Murdoch himself of the $5 billion bid – well before the news was reported. The information came in an email, but was marked "confidential" so Steiger felt obliged to keep quiet. That's understandable, though a bit unfortunate given that CNBC wound up breaking the story. But why did other Journal editors know of the Murdoch bid - folks like Marcus Brauchli, the chosen successor to Steiger, or Dan Hertzberg, deputy managing editor, or Nikhil Deogun, the paper’s Money and Investing editor? This is no small matter because the SEC is trying to figure out why so many DJ options were being traded just days before the story got out. From the NYT:

No one has suggested that anyone at Dow Jones traded on the information, and indeed, many people outside the company were also aware of the bid before it became public knowledge. Officials at News Corporation knew of it, as did people at the investment banks and law firms hired by both companies to advise them on the offer. Both Dow Jones and News Corporation said on Friday that they had received a subpoena from the New York State attorney general and an inquiry from the S.E.C. Spikes in options trading are often a sign that undisclosed news has leaked into the market, allowing someone to profit from it. S.E.C. inquiries into suspected insider trading have become routine in instances of unusual trading ahead of big mergers.

New Century bonuses: It doesn't amount to that much - $3.2 million to 116 executives and key managers – but bonuses for folks who oversaw a company’s collapse? It doesn’t seem quite right. The initial proposal was $6.3 million, but that riled creditors of the OC lender - now in Chapter 11 bankruptcy. The company said the bonus plan would help maximize the value of its remaining assets for sale "by keeping critical employees in those business units incentivized and in place." LAT

Blame game: So who exactly is to blame for the meltdown in subprime loans: Wall Street's big investment banks that encouraged subprime lenders - many of them in Socal - to make risky loans, or the lenders who became sloppy and greedy in cutting whatever deals they could? Both sides present their cases in a NYT overview that focuses on Ownit Mortgage Solutions in Agoura Hills.

William D. Dallas, the founder and chief executive of Ownit, acknowledges loosening lending standards but says he did so reluctantly and under pressure from his investors, particularly Merrill Lynch, which wanted more loans to package into lucrative securities. He recalls being asked to make more “stated income” loans, in which lenders do not verify the information provided by borrowers and brokers with tax returns, pay stubs or other documentation. The message, he said, was simple: You are leaving money on the table — do more of them Mr. Dallas, a trim 51-year-old who has been in the mortgage business for more than 25 years, said he disagreed, but complied.

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But Tom Marano, who heads the mortgage business at Bear Stearns, disputed the contention that Wall Street pressure led to the loosening of credit standards. Investment banks, he said, do not directly make many loans. “If enough independent companies set standards, that becomes the market,” he said. “Wall Street’s role is largely one where we assess risk, we purchase loans.”

Downtown tower: The LAT provides some details on that 76-story luxury condo tower called Park Fifth that would front Pershing Square (and catty corner to the Biltmore). Besides the tower, there are plans for a 14-story luxury hotel. The tower has been in the works for years, but was always held up by market downdrafts. Now, the developer, David Houk, figures the time is right. Well, maybe. But downtown is seriously overbuilt as it is - and, not to sound like a killjoy, but what happens if there’s a recession between now and the tower's completion date some years down the line? That’s a lot of condos to be filled. By the way, the Downtown News had the Park Fifth story a number of weeks ago (no credit from the LAT).

On demand, with ads: Disney has cut an interesting deal with cable operator Cox Communications Inc. that will have ABC and ESPN shows available on demand, but with the condition that Cox disables the fast-forward feature so viewers can't skip the ads (folks using TiVo or other digital video recorders wouldn't be impacted). If followed by others, it could bolster cable's on demand offerings and provide more of an incentive for advertisers and networks. Of course, viewers might not be thrilled about having to sit through all those commercials. WSJ

What about Albrecht?: Time Warner honchos are trying to figure out what to do, if anything, about HBO CEO Chris Albrecht being arrested over the weekend for allegedly assaulting his girlfriend outside the MGM Grand. The girlfriend didn't sustain any serious injuries and apparently isn't pressing charges. Albrecht is a big cheese – he has close ties to Time Warner President Jeff Bewkes, who is expected to succeed CEO Richard Parsons next year. The WSJ reports mounting pressure on management to take some kind of action - perhaps having Albrecht enroll in counseling or an alcohol-treatment program.

Last year, the company drew fire from female employees over its handling of accusations involving Chief Financial Officer Wayne Pace. In June, accused madam Andreia Schwartz named Mr. Pace as one of her customers, a story that landed on the front of New York's tabloids. Mr. Pace, through his lawyer, denied he had an "inappropriate relationship" with Ms. Schwartz. After an internal review, Time Warner said it had found no evidence of illegal conduct.

Tiki angst: In the there's no accounting for taste department, we have fans of the legendary (and over-hyped, over-priced) Trader Vic's still in a snit over the restaurant suddenly shutting down without any sort of send-off. The LAT caught up with the hard-core Tiki types, who would have liked to enjoy one last mai tai at the old joint. Of course, it's not really dead - a scaled-down version opened last week next to the Bev Hills Hilton pool. Wonder if the greasy pooh-pooh platters and nasty waiters will stay on too.

Lacter on radio: This morning's business chat with KPCC's Steve Julian covers the efforts of big business to reform health care, L.A.'s millionaires, and the Bill Gross stamp collection.