Tuesday, June 17, 2008

Securities - Lehman to Raise Capital after Posting Large Loss

The Wall Street banking firm, Lehman Brothers posted a $2.8 billion loss for the second quarter. To allay concerns that it would fail, the bank stated that it would raise $6 billion to strengthen its finances. The publicly traded firm intends to raise this capital by selling common stock and convertible preferred shares. The loss was the bank's first since it became a public company in 1994. Lehman hopes to quell fears in the aftermath of the Bear Stearns collapse and prove that it can survive as an independent firm. It will be interesting to see how readily the bank will be able to raise the capital. This could provide a reading on investors' short-term view of the nation's financial situation. For a more in depth discussion of the Lehman plan please see, The New York Times, "Lehman Posts Loss and Plans to Raise Capital," June 10, 2008.

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