(The Wall Street Journal) -- On Wednesday James Cayne, the 73-year-old chief executive of Bear Stearns, summoned his top lieutenant to his smoky, dimly lit office in midtown Manhattan.

The big securities firm Mr. Cayne had led as CEO for 14 years was under attack. Two of its mortgage-related hedge funds had blown up, costing investors more than $1 billion, and its stock was under siege, down 27% this year alone. The way Mr. Cayne saw it, Warren Spector, Bear Stearns's co-president and the person most often cited as his likely successor, deserved some of the blame.