The survival of US investment bank Lehman Brothers has been called into question as its chief executive scrambled to sell assets to cover losses from toxic real estate investments, sending shares down as much as 46 per cent.
The bank's need to raise desperately needed cash, broadly outlined by CEO Dick Fuld yesterday, failed to assuage investor concerns. The stock dropped $2.92, or 40 per cent, to $4.33 today after falling as low as $3.88.
The steady stream of grim tidings and the dearth of details from the company stoked fears that some of Lehman's clients and trading partners might take their business to more stable firms.
Only six months since the collapse and eventual fire-sale purchase of venerable investment bank Bear Stearns, confidence in the Wall Street business model has faded.
"Although many investors thought it would be avoided, customers of Lehman Brothers are becoming more and more skittish in their dealings with them," said William Lefkowitz, options strategist at vFinance Investments, a brokerage firm in New York.
"If this fear continues to grow, that could lead to the demise of Lehman Brothers."
The shares have lost more than three-quarters of their value since Monday and more than 90 per cent from their 52-week high of $67.73 last November. The crisis came on a difficult day for Lehman, the 7th anniversary of the September 11 attacks in
New York that severely damaged its headquarters across the street from the World Trade Center.