Lehman, based in New York, will shut its BNC Mortgage LLC unit and cut about 4.2 percent of its workforce of more than 28,000. The closing will reduce its earnings by $52 million, Lehman said in a statement. Lehman shares, down 26 percent this year, fell 17 cents to $57.37. Lehman, the biggest underwriter of U.S. bonds backed by mortgages, became the first firm on Wall Street to shut its subprime-lending unit and said 1,200 employees will lose their jobs.
The rising cost of credit took its toll on Lehman Brothers Holdings Inc., Accredited Home Lenders Holding Co. and HSBC Holdings Plc as the subprime mortgage fallout spreads through the economy. Watch of “Job Losses” category for up to the minute reports.