Lehman Brothers’ woes continued yesterday, with its stock down 15 percent at one point on rumors it had gone to the Federal Reserve for money. The investment bank denied that, and its shares closed down nearly 10 percent on the day.

The Journal says on C1 that Lehman is going overseas to look for its latest raft of capital, which may reach more than $4 billion. It lost $500 million to $700 million hedging its credit positions in the second quarter, the FT reports on its page one. That’s in addition to losses on other hedges on its real estate positions.

Both papers note that the Federal Reserve’s post-Bear Stearns loan backstop makes it much harder for the bank to go through a similar panic that takes its legs out from under it.

The NYT on C1 looks at the battle between hedge-fund king David Einhorn and Lehman. He’s called the company’s financial reporting into doubt and helped cause the latest downturn in its shares.

Mr. Einhorn, who runs a $6 billion hedge fund called Greenlight Capital, has been profiting from the Lehman’s growing pain. Critics say he is needlessly fanning fears about the precarious health of the financial industry at the very moment executives are struggling to stabilize their ailing companies…

He questioned how the company valued the assets on its books, and whether it was disclosing all the risks it faces… Lehman has been singled out because of the large role it played in the mortgage market and its reluctance to disclose information about its assets compared with other Wall Street banks.

“Lehman has been one of the deniers,” Mr. Einhorn, 39, said.

The Journal’s Heard on the Street column suggests Lehman may need to issue lots of shares or sell at least part of itself to “stop concerns about the firm affecting the wider financial system.”

Bloomberg reports a derivatives measure is signaling that the credit crunch is set to worsen again.

Ben speaks, buck surges

Fed chief Ben Bernanke moved to boost the dollar with comments that suggested it is too weak and is fueling inflation. That sent the buck surging, while sending the price of oil and gold down.

The Journal goes A1 with the news, saying it represented “an unmistakable break from what traders have long viewed as a U.S. policy of benign neglect toward the weak dollar.”

By jawboning the U.S. currency upwards, the Fed chairman hopes to address the twin ills of inflation and high oil prices. A stronger dollar pushes down the prices of imported goods.

But the tactic carries a risk. If the dollar resumes its tumble despite Mr. Bernanke’s words, he will face pressure to back them up with deeds—and none of the available ones are attractive. Raising interest rates, while helping lure foreigners back to the dollar, would squeeze an already-struggling economy. Intervening in markets to buy dollars, in concert with the Treasury, would violate the Bush administration’s laissez-faire philosophy and perhaps backfire by sparking a renewed bout of selling.

The FT calls it a “radical break” from a policy of not commenting on the dollar. This means that inflation has really got the Fed worried, though the Journal notes it’s just the latest instance of Bernanke breaking with convention.

The Journal also says down low that some are increasingly saying the greenback is too cheap. Goldman Sachs says the euro is 20 percent too high. The NYT runs wire copy on C4.

Down and out in Beverly Hills

The Journal exercises questionable news judgment in splashing on A3 news that Ed McMahon may lose his nearly $6 million house in Beverly Hills. The former Johnny Carson sidekick and Publishers Clearing House spokesman broke his neck a year and a half ago, can’t work, and is seriously behind on his payments. A3?

WaPo’s community Web site bombs

Conventional wisdom says newspapers need to go big, go “hyperlocal,” or go out of business. But the Journal on its Marketplace front reports that The Washington Post’s community Web site experiment is a big flop.

Like hundreds of other hyperlocal sites launched in the past few years, LoudounExtra.com reflects a basic premise: Metro newspapers probably can’t compete with the Internet or cable TV in covering breaking national and international news, but they can dominate what happens in their backyards.

LoudounExtra.com offers detailed databases including every church, restaurant and school in Loudoun County, about 25 miles west of Washington, D.C. It embraces the idea that a high-school prom is as newsworthy as a debate over where to build a hospital, and that Little League deserves major-league attention. And it promises to let visitors to the site shape the news through blogs and photo and video submissions.

But LoudounExtra.com remains little more than a skeleton of the site its architects pledged to build. One reason: the team of outsiders didn’t do enough to familiarize itself with Loudoun County or engage its 270,000 residents.

Yeah, if you’re going to go hyperlocal, you might want to try to get to know your hoped-for readers. Here’s the money quote from the former head of the project, now off to the Las Vegas Sun:

“I was the one who was supposed to know we should be talking to Rotary Club meetings every day,” Mr. Curley said. “I dropped the ball. I won’t drop it in Vegas, dude.”

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