Lehman Brothers as Second Bear Stearns?

Lehman Brothers, one of the top US investment banking firm and the largest dealer of debt is making the hot seat on the news of Wall Street as of now.

Their stocks have plunged down 90+% as of this year. They registered a 52-week high of around $67 and now only trading at a very cheap price of $3.7!

Their stocks plummeted down a significant 45% after posting a $3.9 Billion loss, the largest loss in its 158-year history and their possible deal with Korean Development Bank, which was said to invest US$ 6 Billion in exchange for a 25% stake, ended.

Now, time is ticking for Fuld, Lehman's CEO. He was the longest serving CEO in Wall Street. They have to move out of the limelight. Otherwise, they will be continuosly scrutinized by analysts and credit rating agencies. They need to raise capital as soon as possible. Their equities are slowly drying up as investors dumped their stocks, credit default swaps are continuously rising, and there's possible downgrade by credit rating agencies.

Is this a signal of another Bear Stearns on the way which operated 80+ years? Who thought that such a stable company and has been in operation that long will suddenly collapse?

Or does this signal another take-over by the US government just like what happened recently to the two largest US insurers, Fannie Mae and Freddie Mac? Can the US government afford to make another such costly move?

Who will be Lehman's White Knight?

According to the news, Lehman has been on the verge of collapse at least four times: In 1929 when the stock market crashed; in 1973, when it lost $6.7 Million betting on interest rates; in 1984, when internal dissension led to a takeover by American Express Co.; and in 1994 when newly independent Lehman faced a capital shortage.