Lehman Brothers looks to be latest casualty of lending greed

[sullivan]

From The Guardian (UK)

Lehman Brothers to report early after stock plummets
Lehman Brothers has rushed its trading statement forward by a week to today, amid fears that the investment bank would fail to raise much-needed capital to shore up its finances.

Shares in Lehman Brothers fell by 45% last night, plunging Wall Street back into a state of high anxiety.

The Dow Jones index of leading shares closed more than 280 points lower, almost entirely erasing the gains made on Monday when the markets had reacted with enthusiasm to the bail-out of stricken mortgage finance firms Freddie Mac and Fannie Mae.

The oil price also fell sharply, with Brent crude back under $100 a barrel for the first time since April.

The company will release its third-quarter results at 12.30pm BST (7.30am New York time), along with a disclosure of "key strategic initiatives". According to the Wall Street Journal this morning, it is planning to separate some of its distressed commercial real estate assets into a new venture dubbed SpinCo, and is also in talks with private equity firm BlackRock to sell some British housing assets.

Lehman's options for raising fresh financing appeared to be running out after talks to sell a stake in the bank to the South Korean government-owned Korea Development Bank (KDB) were reported to have broken down.

Lehman is facing billions of dollars in losses from ill-judged gambles on the mortgage market and the investment bank has become the latest victim of the credit crunch. The bank had hoped to secure an investor ahead of its third-quarter results.