Lehman Brothers accuses Japanese lender of insolvency

Lehman Bros. (NYSE: LEH) has battled hard against allegations of improper accounting as well as rumors (and evidence, but hey) the company is facing severe problems that could threaten its viability. The firm accused short sellers of spreading malicious rumors designed to bring the company down.

Now Bloomberg reports that Lehman has stopped covering Japan's consumer lenders. It has also retracted past research on the industry after Aiful Corp. threatened to sue Lehman over a report by an analyst suggesting that the company could be insolvent.

Lehman issued a statement saying that "all previous ratings and forecasts should no longer be relied upon,'' which has to be seen as an admission of poor research.

The irony here is just priceless: Lehman is battling short-sellers raising questions about its solvency while its own analysts over in Japan are raising questions about the solvency of consumer lenders there. Then Lehman basically admits that its analysts screwed up and just stops covering the entire industry.

It makes you wonder whether Lehman's people just don't really know much about solvency. If they can't tell whether Japanese lenders are OK, and admit that, how much faith can you have in the company's reassurances about its own balance sheet?