After the collapse of Bear Stearns (BSC), it’s only natural that investors take a look at other broker-dealers with nervous eyes and exchange traded funds (ETFs) suffer. After all, if it could happen to Bear, is anyone safe?
Today, the concern turned to Lehman Brothers (LEH) as rumors spread that the fourth largest investment bank in the United States could see a run similar to what happened to Bear Stearns. The fears sent Lehman Brothers’ stock down nearly 10% in early trading, Reuters reports.
A Lehman spokeswoman said the rumors were "totally unfounded," which sent the stock back up, before once again heading back down.
Lehman is 6.6% of the iShares Dow Jones US Broker-Dealers (IAI), which is down 2.5% in intraday trading.
The company’s CEO said the Fed’s creation of a liquidity facility for dealers "takes the liquidity issue for the entire industry off the table." Lehman has also said that its holding company has $34 billion of assets it could sell, $64 billion it could borrow against, and subsidiaries with $99 billion of assets it could borrow against.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.