Lehman Shows Its Hand Callan was forced into damage control. She immediately questioned Einhorn's credibility, reminding investors that he was a short-seller. "Mr. Einhorn cherry-picks certain specific items from our quarterly filing and takes them out of context and distorts them to relay a false impression of the firm's financial condition which suits him because of his short position in our stock. He also makes allegations that have no basis in fact with the same hope of achieving personal gain," said Lehman in a statement. Yet, days later, by its actions, Lehman demonstrated that it was in exactly the position Einhorn said it was. On Monday, Lehman raised $6 billion -- higher than what market observers expected. The stock has dropped another 17% this week and is down 64% year to date. Said Einhorn succinctly, "They just raised $6 billion that they said they didn't need to cover losses they said they didn't have." Who was picking cherries? Market observers didn't necessarily blame Callan for Lehman's poor investment decisions, but she lost all credibility for her serial back-tracking. Callan still didn't lack confidence in announcing the capital raise on Monday, sold at 20% off the firm's book value. She jawboned, saying: "The discussions at this point aren't about our viability or the fact that we will be here or the fact that we have sufficient liquidity. I think we put that to bed on a number of different levels through our own actions." Her words simply did not match up to the reality Lehman is facing and that's why she deserved to be removed. She committed the cardinal sin of overpromising and under-delivering -- repeatedly. Einhorn, by contrast, has walked softly and carried big returns for his investors. Yet, neither Callan nor Gregory is completely responsible for the mess Lehman finds itself in. Where was Dick Fuld?