James Dimon tramped through the rain on Wednesday evening and strode into the Manhattan headquarters of Bear Stearns, the embattled investment bank he hopes to buy for a mere $2 a share.

More than 400 Bear executives - seething, fearful and to their dismay, far poorer than they were a week ago - were waiting for him.

Only days after his controversial deal for the beleaguered investment bank stunned Wall Street, Dimon, the chairman and chief executive of JPMorgan Chase, made an appearance at Bear Stearns, hoping to win over executives who have vowed to fight his offer. Dimon left many of them as angry and resentful as he found them.

“I dont think Bear did anything to deserve this,” Dimon said. “Our hearts go out to you.”

“No one on Wall Street could have anticipated this,” he continued. “I feel terrible sometimes when people think we took advantage. I dont think we could possibly know what you all are feeling, but I hope that you give JPMorgan a chance.”

Over the next 45 minutes, Dimon made it clear that he hoped to retain the best employees at Bear but also made it plain that many of Bears 14,000 employees will lose their jobs as a result of the deal, struck at the urging of the U.S. Federal Reserve and the Treasury Department. JPMorgan executives plan to cull one Bear employee after another, while keeping the best performers, as they move to integrate the two firms.

Many of the executives whom Dimon faced Wednesday, all of whom own Bear shares, pledged to fight the deal in hopes of luring a better offer from a rival bank, a prospect that, for now, seems distant. Even so, Joseph Lewis, the largest shareholder of Bear, said in a securities filing on Wednesday that he would take “whatever action” necessary to protect his stake, including seeking out another suitor.

“In this room are people who have built this firm and lost a lot, our fortunes,” one Bear executive said to Dimon with anger in his voice. “What will you do to make us whole?”

The packed room of senior managing directors applauded.

Dimon responded gingerly. “Youre acting like its our fault, and its not. If you stay we will make you happy.”

But the Bear employee was not satisfied. “I think its galling you come into our house and you call this a merger,” the Bear executive went on.

This time, Dimon was silent.

But Dimon, ruddy-faced and sharply dressed in a light blue tie and white shirt, told the executives that those of them who stay might receive at least 25 percent of the value of their recent Bear stock awards in the form of JPMorgan shares. Those who stay until the deal closes will receive a one-time cash payment. Dimon urged them not to blame Bears management, the government or JPMorgan for their circumstances.

Alan Schwartz, Bears chief executive, looking pale, summed it up. “We here are a collective victim of violence,” he said, his voice cracking. “Its natural to be angry, and youre not sure who to be angry at. But we have to put it behind us.”

A few Bear executives urged colleagues to accept Dimons offer.

“Ive been here for more than 20 years,” one said. “This deal cost me big time. But if there wasnt a deal, wed be toast.”

Since the deal was reached in Sunday night, JPMorgan executives have tried to characterize the situation at Bear as business as usual.

It is, however, anything but.

Inside Bear, it is already clear that the new bosses have arrived. On Wednesday, as Dimon made his way across the street under March skies as dreary as the mood inside Bear, a JPMorgan security guard stood watch at Bears entrance. JPMorgan executives have appropriated offices for private meetings and begun placing calls from the desks of Bear executives.

JPMorgan bankers are already calling most of shots on Bears trading floor. Some Bear executives remained in charge of the risks the traders were taking.

Bear traders are shellshocked. In the past days there have been several instances when Bear traders and businessmen have lashed out at the JPMorgan executives, creating awkward moments. The greeting on the Bloomberg e-mail screen of one reads: “BSC Credit Sales for a little while.”

“Never in my wildest dreams did I believe we would be sold for $2,” one employee said Wednesday.

On Monday, JPMorgan held conference calls with executives in various areas of Bear Stearns.

Then on Tuesday, Dimon kicked off a call with Bears brokers at 1 p.m., telling them how his grandfather and father were brokers and that he was confident that the merged firm would be a formidable force on Wall Street.

High corn prices are wreaking havoc for ethanol producers. Archer Daniels Midland (http://www.businessweek.com/ticker/), the biggest U.S. ethanol maker, blamed the pricey grain for nicking its quarterly profits, which came in May 1 below Wall Street forecasts. A week later, VeraSun Energy (http://www.businessweek.com/ticker/) swung to a loss and also blamed corn, currently the lifeblood of the U.S. ethanol supply (see BusinessWeek.com, 5/8/07, ).

However, it has been a different story for the industry’s No. 4 player, Pacific Ethanol (http://www.businessweek.com/ticker/). The Sacramento (Calif.) company turned profitable in its most recent quarter, reversing a $612,000 loss a year ago. How? It placed its bets right in the corn market, a commodity casino where wise hedging now represents the difference between red and black ink.

“The market is driven by how much you pay for corn and how much you get for ethanol, and both trends have been going in the wrong direction since the second quarter of last year,” says John Roy, senior research analyst with http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?capId=23829. “But Pacific went in early and cut deals to get corn at a good price. They figured the right hedging strategy.” Higher Freight Costs an Issue

Pacific Ethanol bought 12 million bushels of corn last year at $3.57, Roy says, while rivals bought later and at a higher price. By contrast, Brookings (S.D.)-based VeraSun paid $4.05 per bushel for corn, cutting into profits. “The two companies bought at different times, presumably because they had different expectations of the cost,” says Roy. “That’s the tricky thing about this market—your feedstock is a commodity and you can’t control the price of it. Being on the wrong side of that bet can mean bad news.”

But corn isn’t the only commodity that affects ethanol producers’ profits. The price of gasoline needs to be sufficiently high, which boosts demand for more ethanol (see BusinessWeek.com, 5/9/07, ).

Some analysts disagree that the story behind Pacific Ethanol’s success and VeraSun’s quarterly troubles is all about corn. Pavel Molchanov of Raymond James Financial (http://www.businessweek.com/ticker/), who covers both companies as an analyst, says the divergence between the companies’ performances has more to do with other short-term problems VeraSun faced over the winter. “Obviously corn prices are high and obviously that’s bad for ethanol producers,” says Molchanov. “But VeraSun’s hedging loss was a noncash item that didn’t factor into its earnings. Their problem this quarter was higher freight costs and higher general and administrative costs, not underlying company fundamentals.”

Still, experts say that for any ethanol company to succeed in the short or long term, a successful strategy for navigating commodities, particularly corn, is critical. “You definitely have to manage your risk,” says Tanner Ehmke, an analyst for http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?capId=2093324. “We’re seeing volatility in corn prices that we haven’t seen for decades, and smart moves in the futures markets are essential. You can’t go naked into this industry without the right protection.”

U.S. drug regulators, in announcing Wednesday that the mystery contaminant in heparin was an inexpensive, unapproved ingredient altered to mimic the real thing, moved closer to concluding that Americans might be the latest victims of lethal Chinese drug counterfeiting.

The finding by the Food and Drug Administration culminated a worldwide race to identify the substance discovered early this month in certain batches of heparin, the blood-thinning drug that had been linked to 19 deaths in the United States and hundreds of allergic reactions.

The contaminant, the regulators said, is a chemically altered form of chondroitin sulfate, a dietary supplement made from animal cartilage that is widely used to treat joint pain. The agencys announcement followed a report Wednesday in The New York Times that was the first publicly to identify the modified substance as the likely contaminant. That report was based on nearly two dozen interviews with researchers and scientists in China, the United States and Canada.

U.S. officials stopped short of saying that the contaminant Д constituting as much as 50 percent of the active ingredient in heparin Д was counterfeit. “At the moment we dont know definitely whether the contaminant was introduced intentionally or by accident,” said Dr. Janet Woodcock, director of the Food and Drug Administrations center for drug evaluation and research.

Even so, the authorities left little doubt that they believed that the contaminant was not an unintended byproduct of some manufacturing process.

In its natural state, chondroitin sulfate does not have anticlotting properties. But it mimics heparin when altered to form what is called oversulfated chondroitin sulfate. That is what made it difficult for Baxter International, the manufacturer of the heparin associated with the allergic reactions, to detect the impurity. “This compound to our knowledge is not naturally occurring,” Dr. Woodcock said. “It should not be in heparin. And it obviously should not be in the form it is in.”

While identifying the contaminant was a significant breakthrough, investigators still do not know if it is responsible for causing the allergic reactions. Nor do they know why the modified ingredient ended up in heparin, though they have raised the possibility that the substance was used as cheap filler.

“The base compound, chondroitin sulfate, is very abundant and an inexpensive compound,” said Moheb Nasr, director of the agencys office of new drug quality and assessment. Chemically modifying it, Nasr added, “will not be that expensive either.”

The FDA said it had found the contaminated heparin at Changzhou SPL, the Chinese plant that supplies the active ingredient to Baxter. Changzhou in turn buys its heparin from two companies, called consolidators, that gather crude heparin from workshops that make it from pig intestines.

Many workshops that make crude heparin are unregulated family operations.

Erin Gardiner, a spokeswoman for Baxter, said Wednesday that tests found the supplies were contaminated before they arrived at the Changzhou plant. “The consolidators and workshops handle the crude material, so that is where our focus is turning,” Gardiner said.

So far, Gardiner said Baxters investigators had been denied access to the consolidators and workshops. “We will continue to seek access.”

Last week, the FDA said it had not yet visited the workshops.

Some heparin producers in China also sell chondroitin sulfate, which can be derived from pig cartilage. Traders and producers say it is far cheaper than heparin, as little as one-twentieth the cost. That could be an enticement for counterfeiters, especially in the wake of a virulent pig virus that swept across China last year, substantially reducing the availability of the starting materials needed to make the active ingredient in heparin.

Contaminated heparin sourced from China has also turned up recently in Germany, where about 80 allergic reactions have been reported. But investigators there have yet to identify the contaminant. FDA officials said their discovery of chemically modified chondroitin sulfate came exactly one year after the discovery that a pet food ingredient shipped from China contained toxic levels of melamine, which was added to make it appear higher in protein. Many pets became ill, and some died.

Around the same time, The Times reported that an unlicensed Chinese chemical plant sold a cheap counterfeit ingredient, diethylene glycol, that was mixed into cold medicine in Panama, killing nearly 120 people and disabling dozens more.

Diethylene glycol mimics its more expensive chemical cousin, glycerine, a safe ingredient used in medicine, food and toothpaste.

The FDA said its search for answers in the heparin case had been made easier because of the cooperation it had received from Chinas State Food and Drug Administration. That was not the case when United States officials inquired last year about the melamine and diethylene glycol.