After Lehman, Who Is Next?

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When we woke up this morning to await the news from Lehman Brothers we fully expected to spend the rest of the day exploring the question: who is next? Candidates such as Merrill Lynch, Wachovia and Washington Mutual would get batted around the same way attention turned to Lehman after Bear Stearns fell.
But we didn't do that. It turns out that Lehman is still next. Talking to traders and money managers today made it all too clear to us that the news today has not extinguished questions about the viability of Lehman. The lack of details about financing and other aspects of the commercial real estate spin off, worries about where profits will come from, the non-plan and non-strategy to raise capital, the long delay in the announcement and suspicions that Lehman may employ some fancy accounting to reduce the size of its losses were all cited by folks we spoke with. Lehman is still the most vulnerable firm on Wall Street.
Everyone is saying that, at best, Lehman may have bought itself some time. But money managers we spoke with today agree that Lehman doesn't have the balance sheet to afford to buy much of anything, not even time.

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