Lehman Brothers is selling $3 billion in new shares to allay fears after its stock dropped 42% this year, Bloomberg reports. "We still maintain that we don't need capital, but we've realized that perception is the dominant issue in today's markets,'' said CFO Erin Callan. Lehman fell up to 48% this month on rumors that it lacked cash and faced a Bear Stearns-style meltdown.
Lehman's shares dropped by one fifth last week and skidded another 2.6% after the announcement, the Wall Street Journal Reports. But Lehman says it is sitting on $30 billion in cash, $64 billion in convertible assets, and can access $200 billion in Federal Reserve credit. "Reality will trump fear,'' one analyst wrote. "Lehman has ample liquidity to run its business."