Dick Fuld is never one to show weakness. But the idea of Lehman Brothers raising capital mainly “in response to investor interest” seems a little far fetched. Presumably the investment bank wanted to raise capital to bolster confidence in its financial strength, and investors indicated they were willing to play ball. The plan to raise $3bn-$4bn does not mean Lehman was desperate for capital at any price. After all, the bank is not issuing straight equity. It is offering convertible stock with a roughly 7.5 per cent coupon and an option to convert into ordinary shares at a premium of about 35 per cent. Given the massive volatility in Lehman shares in recent months, that option is worth a lot.

That said, even if Lehman has so far avoided some of the massive losses on mortgage-related products that forced other banks to raise capital, it had a hair-raising experience when its shares plummeted as Bear Stearns got into trouble. Increasing its capital cushion makes sense, given the uncertain outlook. And even if it avoids further balance sheet hits, Lehman is looking to reduce leverage, like other Wall Street groups. That either means selling assets or raising extra capital.