Will Lehman be the next Bear Stearns?

Lehman Brothers has been the hot topic the past several months after the fall of Bear and especially within the past recent weeks. Investor speculations drove the stock price of Lehman down. Bear Stearns was the first to fall and there are many more to come. With the fall of Bear, there are going to be many ripple effects. With all the fundings and back office support to many businesses provided by these large investment houses, the worst have yet to come.
Lehman reported it’s biggest loss in over 150 years. The company posted a $3.9 billion 3rd Quarter loss on $5.6 billion write-downs. The stock which was trading a high as $67.73 as the past 52 weeks opened today $4.47. Lehman has also announced that it wants to sell a large majority stake - 55% of its investment-management unit which includes the Neuberger Berman asset-management business. This private equity side of the business is worth about $30 billion and included in this business are Venture-Capital investments, Lehman’s Merchant Banking and Infrastructure investment vehicles Real Estate, and Credit-related investments. Lehman wants to sell off 55% of this stake leaving them with only 45% of the future returns from their private equity deals. There is a lot of pressure on Lehman to raise capital to stay float. In this market, there doesn't seem much relief in sight.

Hedgefunds & Private Equities and their role in the election.

This election should be a very interesting one. Last year, there was a proposal by a Democratic lawmaker that the carried interest would be taxed at 35% the corporate tax rate rather than the current 15% at the capital gains rate. Hedgfunds and Private Equities have been under heavy scrutinty the past year and will be the center of many debates. In turn, the funds have been lobbying large amounts to their respective parties. Either way, when it comes to creation of a tax code, there will be winners and losers. With the current market condition, many funds are already having a their roughest year posting postive returns; now, imagine having the carry taxed at a significant higher rate. In addition, Joe Biden, a Democratic primary mentioned that there is a need for more "transparency" in the private equities and hedgefund industries. This is exactly what needs hedgefunds need in the time where they are posting their worst performance numbers. Many funds are already in the process of closing down their funds. This election should be an interesting one especially with the spotlight on the hedgefunds and private equities. Let's see how the market will react.