Bear Stearns plans risk controls after losses -WSJ

NEW YORK, July 2 (Reuters) - Bear Stearns Cos. Inc. BSC.N plans to build up risk controls at its asset management business after two of its hedge funds hit rock bottom by making bad bets on risky mortgages, the Wall Street Journal reported on Monday.

Citing people familiar with the matter, the paper said Bear Stearns Asset Management's risk-management team was likely to report to the parent company's chief risk officer Michael Alix.

The team had previously reported to the asset management division's chairman and chief executive, the report said.

The Journal said the investment bank also planned to add new risk managers to the unit.

Last week, Bear Stearns hired Jeffrey B. Lane, a vice chairman at Lehman Brothers, to help repair the company's image, find out what went wrong and boost the asset management business. Lane is replacing Richard Marin as chairman and chief executive of Bear Stearns' asset management business.

The meltdown of the hedge funds embarrassed Bear Stearns, widely known for its savvy in handling mortgage risk. The funds buckled on wrong-way bets tied to subprime loans, which are made to people with weak credit.

Bear Stearns could not immediately be reached for comment.

((Reporting by Michael Erman, editing by Jacqueline Wong; Reuters Messaging: michael.erman.reuters.com@reuters.net; +1 646 223 6021)) Keywords: BEARSTEARNS WSJ/

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