The Lehman Lowdown

Today, Lehman Brothers (LEH Quote) warned it would post a $2.8 billion second-quarter loss and announced plans to raise $6 billion in capital.

Lehman shares plummeted 8.7% to $29.48 after announcing the news.

On May 16, TheStreet.com TV's Gregg Greenberg interviewed David Einhorn, founder and president of Greenlight Capital (GLRE Quote), about Fooling Some of the People All of the Time, his new book about short-selling Allied Capital (ALD Quote).

Here is a highlight from that interview, when Einhorn stated his take on Lehman, followed by a few other angles on Lehman from TheStreet.com.

David Einhorn Shows His Hand (Video)

Greenberg: "Aside from Allied, what are you shorting right now?"

Einhorn: "Well, we're still short a bunch of the credit-sensitive financials. Most particularly, Lehman. Also, some of the larger money center banks and regional banks. We're short some of the credit agencies. And were short a bunch of companies that are trading at reasonably aggressive multiples of forecasts that assume a second-half [of 2008] recovery, which we're not so sure whether it will appear."

To watch the full interview, click the video player below:

Cramer: Einhorn's A-OK (Video)

Jim Cramer defends Einhorn, who disparaged Lehman Brothers and shorted the stock, arguing that until you police the longs who hype their stocks, shorts like Einhorn have done nothing wrong.

Cramer: "I come out squarely for Einhorn. Now, I like Lehman. Well, you can say, 'Hold it. If you're squarely in favor of Einhorn, you hate Lehman.' No. I'm squarely in favor of Einhorn because he's doing exactly what the longs are doing. And until you police the longs and ask whether you sold into it, I frankly don't care. I obviously like the people at Lehman Brothers... and I think they do a good job. And I think if Einhorn's wrong, he's created one of great fundamental buying opportunities of all time."

Watch the full video.