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Lehman Brothers -- The Next Banking Casualty?

Natalie Erlich,|News Associate
Monday, 17 Mar 2008 | 2:50 PM ET

Lehman shares tumbled more than 20 percent Monday as Wall Street speculated whether or not it's the ailing banking system's next casualty. CNBC's guests offered their perspectives. (Full story: Lehman Shares Hit as Domino Speculation Grows)

Bear Stearns Task Force
As a credit casualty, Bear Stearns is being unloaded for a mere $2 a share, with Richard Steinberg, Steinberg Global Asset Management; Rebecca Darst, Interactive Brokers; Mark Arian, Towers Perrin and CNBC's Joe Kernen

High Implied Volatility

"I'd be keeping an eye on Lehman Brothers.

"Obviously, implied volatility on all the brokerages was sharply higher on Friday— I mean Morgan Stanley was up by half, and Goldman Sachs and Merrill Lynch [were] up by a quarter, but implied volatility in Lehman Brothers' options was up by more than 93 percent on Friday."

- Rebecca Darst, Interactive Brokers
(Contd.)

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Financials Preview
The Bear Stearns bombshell kicks off a big week of earnings news for financials, with Jeffery Harte, Sandler O'Neill; Brian Belski, Merrill Lynch and CNBC's Joe Kernen

Reliance on Repo Funding

“Can it happen at Lehman Brothers ? Yes, it can happen for any of the brokers. They’re very dependent on repo funding. Depending on the maturity—maturity file of that repo book, I mean it could happen to anyone.

"Will it? I’m less inclined to think it will, because Bear did kind of stand out as being more dependent on repo funding than its peers … I don’t think it happens at Lehman Brothers or any of the peers, but unfortunately I can’t sit here and tell you that it won’t.”

- Jeffery Harte, Sandler O'Neill

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