Lehman’s “Liquidity Pool” Deeper than Goldman’s

The quick profits generated by short positions has everyone bloodthirsty, and beating up on Lehman has become a cottage industry.

Some of the arguments are silly:

``Lehman won't go the way of Bear Stearns,'' said Jon Burnham, chief executive officer of Burnham Securities, which manages about $3 billion including JPMorgan shares. ``Bear Stearns is a maverick firm. Lehman is liked.'' Bloomberg

But perhaps the bears are gunning for the wrong guys, at least if you run the numbers on the metric du jour:

Lehman's $98 billion liquidity pool compares with $61 billion at Goldman Sachs Group Inc., the largest and most profitable securities firm, according to Bernstein analyst Brad Hintz. Bear Stearns had $17 billion at the end of the fourth quarter.

Lehman's liquid assets are more than five times greater than its shareholders' equity. At Merrill Lynch & Co., the world's largest broker, and Morgan Stanley, the second-biggest U.S. securities firm, the ratio is three times equity. Goldman's liquid assets are double its equity.

On Wall Street they say if you want a friend, get a dog. I don't know if Dick Fuld has one, but traders might be shooting against the wrong firm. Although shotguns are as effective as rifles in this tape.

The dust will eventually settle, but for now emotions rule.

Lehman's Fuld Says Liquidity Concern `Off the Table'
Bloomberg

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