For some time now people have wondered which big bank would find itself in trouble after the collapse earlier this spring of Bear Stearns. Everyone’s best guess is that it might be Lehman Brothers. The news today is not good: a $2.8 billion loss that the bank’s tough CEO Dick Fuld called “totally unacceptable.” Do you think?
One of my co-workers, economist Jennifer Kuan at the Stanford Institute for Economic Policy Research, suggested to me the other day that one explanation for an attack on a bank might be whether or not it is up front with investors that it is in trouble. Possibly, for example, Bear Stearns was not as forthcoming as it should have been about its mounting losses and so others on Wall Street were not willing to back them up when things got really difficult.
Could the same be happening to Lehman now?