The Five Dumbest Things on Wall Street This Week

3. Bear Market

Bear Stearns (BSC Quote) is firing away.

The New York-based brokerage firm eliminated 310 jobs Wednesday in its mortgage origination business. The firm said it would combine two units into Bear Stearns Residential Mortgage, or Bear Res.

"We have a powerful mortgage franchise, and this combination will allow our account executives better access to the full suite of products Bear Res can now offer," said Bear mortgage chief Tom Marano. "A hallmark of our franchise has been our ability to adapt to changes in the market environment and product demand."

One change in the market environment is that demand has dried up for the subprime mortgages that Bear and rivals such as Lehman Brothers (LEH Quote) once issued in great volume. Investors fled after defaults spiked this past spring.

Since then, mortgage issuers everywhere have been mostly limited to issuing mortgages that pass muster with government-sponsored investors such as Fannie Mae (FNM Quote). Those loans are much less profitable for issuers than subprime mortgages were.

Leave it to Bear to paint the market's sharply diminished appetite for mortgage paper as a positive development, though.

"Looking ahead, we will soon be expanding our product menu to include Fannie Mae, Freddie Mac and FHA loans," Marano said. "These additions will increase our capabilities and further allow our brokers to select the products that best meet their customers' needs."

If only Bear had thought of that earlier.

Dumb-o-Meter score: 88. "The combination will allow the firm to right-size the business to current market conditions and increase efficiency," Bear says.