"Lehman is next. The once proud Lehman is going under, says:
Rocky History
Still, absorbing Lehman would be a yeoman's task. Unlike Bear Stearns, which has a couple of strong assets in its clearinghouse and prime brokerage business, Lehman has few standouts. The once-proud, fixed income business, which has had three heads in the past three years, remains in shambles after moving aggressively into risky subprime securities. Adding to its woes, top bond executive Rick Rieder left in May to start a hedge fund.
Meanwhile, Lehman pales next to Morgan Stanley (MS) and Goldman Sachs (GS) in mergers and acquisitions, where it ranks in the middle of the pack. "They don't have a long-standing history in investment banking to thrive in this environment," says Hendler.
Then, of course, the bank has a history of rocky marriages. When American Express (AXP) purchased Lehman back in 1984, it was a poor fit almost immediately. The freewheeling style of Lehman's legendary bond traders didn't mix well with the staid atmosphere of its corporate parent. Executives clashed on everything from pay packages to critical decisions like asset sales. The two finally divorced a decade later.
Despite the difficulties inherent in an acquisition, Lehman's days as an independent firm may be numbered. Says analyst Chris Whalen of Institutional Risk Analytics: "Lehman is next. When you have a pack of dinosaurs, the slowest gets picked off." |
