Lehman Announces Asset Sale Amid Jitters Lehman Brothers has announced plans to sell a majority stake in its investment management business amid mounting losses and a plummeting share price. The 158-year-old firm also said it would spin off a troubled real estate unit and cut its dividend.

Lehman Announces Asset Sale Amid Jitters

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ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

And first this hour, the troubles of Lehman Brothers. That is the latest Wall Street investment bank to suffer major losses. Yesterday, its stock lost nearly half its value, and this morning Lehman announced that it expects to lose nearly $4 billion in the third quarter.

Well, now the company is quickly trying to sell off assets to raise billions of dollars and to stay alive as an independent bank. Lehman has lots of assets to sell, but it's not clear the firm has buyers yet or how much they'll pay.

In a few minutes, we'll put Lehman Brothers' situation into some global context. But first, NPR's Jim Zarroli reports on how the bank hopes to get back on its feet.

JIM ZARROLI: The rumors about Lehman Brothers' troubles have been dominating the financial markets for days. So today, the company did what it could to get control of the situation. It released its third-quarter earnings report early, and it told investors how it hoped to climb out of the morass it's in.

The plan is to sell off a majority stake in its investment management division, but company officials also hinted that they would consider other ideas too, including an outright sale of the company. Joseph Mason is a professor of banking at Louisiana State University.

Professor JOSEPH MASON (Banking, Louisiana State University): They have some plans. They're a classic type of plan, try to sell some amount of the bad assets just to raise cash to survive in the short run.

ZARROLI: Lehman also said it's talking to some big private equity firms about investing in the company, but Mason is skeptical that anyone will want to put money into Lehman. He notes that Lehman was in talks for months with a Korean development bank about a deal.

Mr. MASON: KDB had plenty of time to do due diligence on the firm and backed out completely. Now Lehman's trying to say, well, these other private equity investors might get involved. You have to ask the question, are they going to see anything different than KDB?

ZARROLI: It's not just that Lehman is losing money. Lehman is a large and complex company with a number of business lines, including investment banking, bond sales and trading. Like Bear Stearns before its collapse, Lehman is loaded down with complex securities that are especially hard to value, and Doug Roberts of ChannelCapitalResearch.com says people don't want to invest in a company when they're not exactly sure what it's worth.

Mr. DOUG ROBERTS (ChannelCapitalResearch.com): People are wondering, am I better off making a capital infusion now or waiting for this thing to be liquidated or sold off, where I'm going to get a better price?

ZARROLI: And Roberts says Lehman has made its problems worse by being slow to acknowledge them and downplaying their seriousness once it did. As a result, he says, the company has lost confidence on Wall Street.

Mr. ROBERTS: It's one thing if you have problems. It's another thing if people don't believe what you're saying, and they just came repeatedly to the point where people really don't believe what they're saying.

ZARROLI: If there's a bright spot for Lehman, he says, it's the Federal Reserve's decision last March to let investment banks borrow from its discount lending window, which insures it will have access to capital and won't fail any time soon.

Mr. ROBERTS: Lehman has a period of time to really deal with this. It's not like something that's exploding, and that also gives a certain amount of creditability that allows them to continue to operate and try to find bidders for something like this.

ZARROLI: But Lehman can only get by for so long borrowing money to keep going. Sooner or later, it will have to deliver the kind of sweeping overhaul plan it announced today.

Jim Zarroli, NPR News, New York.

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