Finally.

After the blowup of two hedge funds, a steep slide in its business and stock price, reports of top management being missing in action, and news of a federal investigation into trading by a former executive at the firm, James Cayne is stepping down as chief executive of Bear Stearns, according to reports this morning.

But there will probably not be immediate changes at Bear, even if some investors hope for a sale or a strategic partnership.

For one thing, Cayne, who will turn 74 on Valentine's Day, will remain as chairman.

Pointing out that Bear, unlike its Wall Street rivals, had failed to diversify and globalize under Cayne, Rob Cox in Breakingviews.com, says that "with Cayne clinging to the chairman's job, it's hard to see more than a half-baked future for the investment bank."

In an interview with Bloomberg News, a Bear director, Henry Bienen, president of Northwestern University, suggested that it would be business as usual at the firm.

"Jimmy's still a huge shareholder," Bienen said. "It's the board's view that Jimmy would stay very involved." (Cayne owns nearly 5 percent of the firm.)

"It's a different situation from what there was at Merrill and some other places, where clearly there was some pressure for them to step down," Bienen added. "Part of it may be the culture of the company. It's been a place where there hasn't been a lot of turnover in leadership."

Alan Schwartz, president of Bear Stearns and an employee at the firm since 1976, is expected to succeed Cayne as C.E.O.

While a highly regarded investment banker, Schwartz has no experience with the bond-trading business, the engine that drives Bear fortunes.

Kate Kelly of the Wall Street Journal, who broke the news late Monday that Cayne was about to step down, says that given Schwarz's lack of trading chops, there has been talk that Bear "might bring on new executive talent by purchasing another trading firm." But that has not yet resulted in serious discussions, she says.

The departure of Cayne will certainly revive the perennial speculation about a takeover of the firm. It is the smallest of the Wall Street houses, and apparently there have been overtures in the past that Cayne, chief executive since 1993, has spurned, insisting on a higher price.

With its stock halved from a year ago, and now trading below book value, Bear is undeniably cheap. It has a market value of just $9 billion.
 
But is there any financial institution willing to buy a business so tied to mortgages as Bear at the current time?

Dennis Berman in the Wall Street Journal's Deal Journal blog notes that for a bank, it would arguably be cheaper to simply pick off Bear's best traders and executives rather than buy the firm.

Yet Bear still presents an opportunity, he says.

"Looking at Bear Stearns as a 'bank' is a misnomer," he says. "It now has much more in common with a new breed of hedge funds—such as Citadel, D.E. Shaw or SAC—that are building out infrastructures across the financial-services industry. Buying Bear Stearns would be a convenient way for one of these players to acquire a public stock listing, much as the New York Stock Exchange did when it bought Euronext NV."

But any change at Bear will be welcome.

As Meredith Whitney, a securities analyst with CIBC World Markets, told the Journal, "How the firm did as well as it did, for as long as it did, with such a hands-off manager, is really impressive."