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Lehman Gets Murdered By Fannie And Freddie Fears

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Lehman is down is winning the race to the bottom today, down more than 19 percent while the Amex Securities Broker/Dealer index has dropped just 2.6 percent. Unlike other days, when stock declines could be blamed on rumor mongers, the rumor mill isn't grinding away at Lehman today. What's driving the stock down seems to be a ripple effect from the problems at Fannie Mae and Freddie Mac. But exactly why that should have a disproportionate effect on Lehman is not immediately clear.
One trader we talked to said that Lehman suffers more than other financial firms from the fears over Fannie because Lehman is viewed as having the shakiest balance sheet. "No one knows what will happen if Fannie blows up or gets taken over by the government. Lehman is still highly leveraged, has questionable business prospects and is viewed as teetering on the edge," he said.
Another trader indicated that the problem was more concrete. If Fannie and Freddie went down, it would be difficult if not impossible to securitize mortgages. But isn't that business already gone? "This could have a long-term effect, basically permanently removing an important business from the Wall Street playbook," the other trader said.
But we want to know what you think. What's crushing Lehman today?