Will Lehman Be the Crunch's Next Victim?

Shaky confidence means its biggest fear may be fear itself
By Rob Quinn,  Newser Staff
Posted Mar 18, 2008 4:52 AM CDT
The headquarters of Lehman Brothers is shown on Monday, June 11, 2007 in New York.   (AP Photo/Mark Lennihan)
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(Newser) – After a collapse of confidence sank Bear Stearns last week, some traders are betting that Lehman Brothers will be the next victim of the credit crunch. Its stock went on a rollercoaster ride yesterday—plunging 40% at one point and closing down 19%, the biggest fall since the firm went public. But analysts, wary of giving vultures more reasons to circle, are watching what they say about the brokerage firm, Marketwatch reports.

"Just commenting on it seems to give it more credence," a professor at Harvard Business School said about Lehman's supposed woes. Many on the Street think that Lehman is in better shape than Bear Stearns was, and today's first-quarter earnings report will be watched closely. But the greatest threat to Lehman might be the waning confidence of its investors, rather than the state of its finances. At that point, said one analyst, "no level of liquidity will be sufficient."