The entrance to a Lehman Brothers bank
The entrance to a Lehman Brothers bank - 
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Kai Ryssdal: The financial fallout from the subprime mortgage mess continues to rain down on Wall Street. The latest anxiety comes from reports that Lehman Brothers, Wall Street's smallest independent investment bank, suffered higher-than-expected losses.

To shore up its books, Lehman scraped together $4 billion in new capital over the past quarter, but Marketplace's John Dimsdale reports that may not be enough.

John Dimsdale: Lehman is reportedly planning to raise another $3-4 billion by either selling more stock or accepting investments from overseas sovereign wealth funds. Either one would dilute the value of its current shares. Some analysts have downsized their forecasts of Lehman's future performance.

John Coffee: I wouldn't predict any imminent danger for Lehman.

Columbia University's John Coffee says accumulating capital may merely be Lehman's way of making itself more expensive and therefore less attractive to buy.

Coffee: Lehman is uniquely positioned as the last independent bank that's within the range of the takeover market and by raising capital, it makes that at least marginally more difficult.

But Lehman's problems point out that Wall Street banks still hold lots of shaky mortgage loans. The Federal Reserve has been lending banks plenty of cash to head off short term problems, but University of Maryland business professor Peter Morici isn't sure that'll be enough.

Peter Morici: The question is can the Fed buy them enough time to rebuild their businesses? These banks do have solid businesses. However, they've been engaged in so many inappropriate practices in so many aspects of their business they have to fundamentally change the way they operate.

Morici and other economists also worry that if cash-strapped consumers stop borrowing for cars, education and shopping, banks could face even tougher times, which means predictions that the worst is over may be premature.

In Washington, I'm John Dimsdale for Marketplace.