posted on Mar, 17 2008 @ 10:22 PM
Bear Stearns is toast. But the problem is still big and able to take out more financial services entitites.
NEW YORK (MarketWatch) -- Analysts who cover broker Lehman Brothers Holdings Inc. watched closely from the sidelines Monday, loath to add to market
speculation that the firm may be the next major brokerage to falter.
Maintaining investor confidence will be key to keeping Lehman afloat, at least for now, according to BMO Capital Markets analyst George Lazarevski.
"Similar to Bear Stearns, the greatest risk for Lehman Brothers is the risk that once speculation begins, it becomes a self-fulfilling prophecy, and
no level of liquidity will be sufficient," he told investors Monday.
Lehman Chief Executive Richard Fuld said the Federal Reserve's decision to start lending directly to brokerage firms improves their liquidity. The
Fed usually lends directly only to banks, but the central bank widened its reach in a historic move on Monday to include brokerages such as Lehman as
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The underlying problem - which is mortgage defaults - is still big and growing. We have no guarantees that the problem won't spread to more banks
and brokerages heavily invested in mortgage securities - many of which were overvalued with triple A ratings when the underlying mortgage paper was
sub-prime and/or Alt-A.
Do you think Lehman's is the next domino to fall? Any more banks and brokerages on the failure list?