Lehman's woes heighten worries about other firms

By Elinor Comlay and Jonathan Stempel - Analysis

NEW YORK (Reuters) - As Lehman Brothers Holdings stared failure in the face on Sunday, anxiety intensified about the health of several other big U.S. financial institutions.

"We will see other major financial firms fail," former Federal Reserve Chairman Alan Greenspan said.

"Indeed, we shouldn't try to protect every single institution. The ordinary course of financial change has winners and losers," he said on the ABC program "This Week."

The implosion of Lehman, wracked by worries about losses in its portfolio of tens of billions of dollars of mortgages and real estate, comes six months after rival Bear Stearns collapsed and a week after the government took over mortgage companies Fannie Mae and Freddie Mac.

Lehman's travails have already heightened concerns about American International Group, Merrill Lynch & Co and Washington Mutual, whose shares all lost more than one-third of their value last week.

Nouriel Roubini, a New York University economics professor who predicted the U.S. housing crisis, said the government lacks the wherewithal to step in every time a big financial firm fails.

"I don't see any simple solution to this mess," he said.

As stock prices fall, it becomes harder to raise capital.