Tequila,
Thanks for weighing in on the article. Is naked short selling really just that marginal of an issue compared to massive losses and Fuld's management?

Here's what gets me: Lehman's stock increased close to 50% during the three week July 15 SEC order that required hedge funds to borrow real stock before they sold it. The SEC let the order expire, and as Mitchell notes:
The day after the emergency order expired, Lehman’s stock nosedived. So did a lot of other stocks that had enjoyed a temporary reprieve.

Mark my words, the data for August and September will show that soon after the order was lifted, rampant naked short selling began anew.

It will show a sustained attack on Fannie Mae and Freddie Mac, with failures to deliver exceeding one million shares, until the day the two companies were nationalized. It will show Lehman getting hammered (blast-pause-blast) until its stock was so low that there was no way it could raise capital. And it will show that in Lehman’s final days, hedge funds sold unprecedented amounts of phantom stock, knowing that the stock would never, ever have to be delivered.
If the data comes back and affirms what Mitchell is saying, naked short selling would still not be to blame Lehman's collapse?

Mitchell says the 2.8 billion loss in the second quarter was largely a result of reducing exposure to mortgages by "marking them down to levels dictated by Einhorn’s bogus index – the CMBX". This not the case?