Economist Richard Yamarone with Argus Research said he believes the worst is behind us (economically), but he feels another Wall Street powerhouse may go under before it’s all done. Remember, Yamarone correctly called Bear Stearns. I can’t help but think it may be playing out in recent news about Lehman Brothers. First, a significant quarterly loss (no real surprise), and now the Financial Times reports that investors of all stripes are betting big against the company. According to Monday’s story:

“Many investors are continuing to bet heavily against Lehman Brothers, lifting the percentage of the bank’s shares sold short to a record level. The value of the bank has nearly halved in the past year amid concern about its finances. The level of short interest in Lehman has been rising since late last year and spiked sharply in the past two months to 13 percent, indicating that many other short sellers have piled in. The level of shares held short in Lehman is the highest of the Wall Street investment banks [emphasis mine].”

The paper quotes David Einhorn, the high-profile principal hedge fund manager at Greenlight Capital, who began selling short last July on the belief that the company was under-capitalized and had not fully marked down the value of its assets.

“The problem is the overall leverage and loan portfolio,” Einhorn tells the Times. “They are 40 times levered on tangible equity, and they own things that don’t strike me as being the kinds of things that should be levered at all.”

God knows I don’t want it to happen, but hold onto your hats (and your portfolios) if it does.