Fallout: The Financial Crisis

Lehman plans to unload assets

Janet Babin Sep 10, 2008
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Fallout: The Financial Crisis

Lehman plans to unload assets

Janet Babin Sep 10, 2008
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TEXT OF STORY

Bob Moon: Lehman Brothers says it’s on the way to burning through another $4 billion this quarter. The venerable Wall Street institution is in dire need of a cash infusion. But the bank’s executives have a plan to save the company — and avoid the need for another federal bailout. They laid out their strategy this morning. Marketplace’s Janet Babin reports from North Carolina Public Radio.


Janet Babin: Lehman Brothers exposure to bad mortgage loans has it struggling to survive. On a conference call this morning, Lehman’s CEO Richard Fuld said real estate losses and public scrutiny have clouded the company’s underlying value. Fuld says Lehman will spin-off $25 billion worth of commercial mortgages into a new company.

Richard Fuld: We put a concrete plan in place to exit the majority of our commercial real estate.

It will also sell a majority stake in its investment management division, and slash its annual dividend. Portfolio manager Kurt Brunner at the Swarthmore Group says this fire sale will attract some buyers from private equity firms. At least that’s the hope. Brunner says the big question will be:

Kurt Brunner Can Lehman fail or will Lehman be allowed to fail? And I think the answer is the same and the answer is no.

Brunner says the government would likely step in to stop the financial chaos if Lehman can’t stay afloat. Just like it did this summer with investment bank Bear Stearns.

I’m Janet Babin for Marketplace.

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