Lehman's Outcome

Lehman Brothers(LEH) is similar to Bear Stearns(BSC),but has a more diversified business.Erin Callan,Chief Financial Officer,said the dealer's outcome for the first quarter was pretty good.Lehman's earnings were better than expected.The Fed's discount window is a great opportunity for them.The equities markets remain weak.We have a lot of confidence to build back into the system.She wouldn't expect it to feel stable until 2009.There's been a sea change.The question of Lehman's liquidity is now off the table.The much bigger question is what's the best way to run this business model.She was shocked by the Bear Stearns takeout.It was a very bold move by the Federal Reserve,and exactly what was needed to stabilize the environment.It has been very difficult to access unsecured funding for the past three months.For the rest of the year,there will be very little access to it ,if any.Liquidity is only one part of the story.The balance sheet is also important.Ms.Callan expects volatility through the second quarter.Lehman Brothers has been upgraded to a buy rating by Goldman Sachs(GS).