Lehman Looking Bad

The already beleaguered investment bank appears to be fighting for its survival today, trying to spin off two of its major divisions within the company to raise capital in the face of a $3.9 billion loss. Unfortunately, it will be trying to spin off $32 billion of its commercial mortgage assets- which aren’t very popular at the moment.

Lehman’s announcement came a day after the bank’s shares plunged 45 percent to $7.79 a share following reports that its efforts to secure a strategic investment from Korea Development Bank had failed. Investors also feared that the federal government would not bail out Lehman as it has mortgage giants Fannie Mae and Freddie Mac and investment bank Bear Stearns.

The investment bank has been struggling amid growing losses on its commercial and residential real estate holdings. It has been shopping its prized investment management division, which includes Neuberger Berman. People with knowledge of the auction say Lehman has asked for final bids to be submitted by this weekend.

Lehman has been under heavy pressure since the collapse of Bear Stearns, as investors believe its heavy reliance on mortgage-related underwriting and trading could lead it to suffer the same fate that forced Bear into an emergency sale to JPMorgan Chase.

Let’s hope they make it- though the “big news” would be if they don’t.

Advertisements

One response to “Lehman Looking Bad

  1. polisciafterparty

    it was the fall through of the lehman/KDB deal that caused the Dow Jones to plummet yesterday…bad news…

    -trader

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s