Dim Prospects For Lehman Brothers' Future

Treasury Department, Federal Reserve And Private Banks Prepare A Safety Net In Case Of Lehman Bankruptcy

(AP)  The outlook for Lehman Brothers' future seemed dim Sunday after Barclays PLC withdrew its bid to buy the beleaguered investment bank and government officials and Wall Street bankers remained at an impasse about a rescue plan.

The withdrawal of Barclays, which along with Bank of America Corp. was considered a front-runner to buy Lehman, demonstrated how complicated negotiations over Lehman's fate had become. And, Sunday afternoon, The Wall Street Journal reported that Bank of America and Merrill Lynch & Co. were involved in merger talks - which would knock Bank of America out of contention as well.

The Lehman talks were aimed at selling the investment bank in whole or in part. The sticking point was the potential buyers' insistence that the Bush administration offer the kind of help it did in brokering the buyout of Bear Stearns Cos. last March, when the government agreed to a $29 billion loan to buyer JPMorgan Chase & Co. from the Federal Reserve. But Treasury Secretary Henry Paulson said the government will not help close a Lehman deal.

Lehman declined to comment on the talks.

If no deal were reached, it raised the specter of a bankruptcy and liquidation of the 158-year old investment bank. Bankers and investment banking officials briefed on the talks described them as being both complicated and fluid, and that there was still hope that an agreement can be brokered or that new bidders might emerge. They spoke on condition of anonymity because talks were ongoing.

There were signs that Lehman Brothers Holdings Inc. might be edging closer to a bankruptcy filing, with several reports that it has hired Weil, Gotshal & Manges, the law firm that handled the collapse of investment firm Drexel Burnham Lambert in 1990.

Moreover, there was also an emergency trading session being held at the International Swaps and Derviatives Association to "reduce risk associated with a potential Lehman Brothers Holdings Inc. bankruptcy." The ISDA, which arranges trades for derivatives, said it was allowing customers to make trades and unwind positions linked to Lehman - but that those trades would be voided if no filing occurs before midnight.

Barclays, Britain's third-largest bank, backed out of talks on Sunday after emerging during the morning as a front-runner to take over Lehman's assets, according to a person inside the U.K. bank who spoke on condition of anonymity, in keeping with company policy. The person, who had knowledge of the talks, said the decision was "very unlikely" to change. He said Lehman was attractive but did not meet what he described as Barclay's stringent requirements.

The Journal said on its Web site that after Bank of America was unable to reach a deal for Lehamn, it turned instead to a possible combination with Merrill, considered a better fit for the bank.

Several private-equity firms were also believed to be interested in Lehman's assets. Bankers and officials with direct knowledge of the discussions described the talks as complicated Sunday morning. Top officials from the Federal Reserve and the Treasury Department and executives from several Wall Street banks were huddled at the New York Fed's downtown Manhattan headquarters for a third day seeking a solution to Lehman's financial crisis. Failure could prompt skittish investors to unload shares of financial companies, a contagion that might affect stock markets around the world when they reopen Monday. Asian markets will begin trading Sunday night Eastern time.

[pensacola98]

$60 Billion in soured real estate holdings is enough to break their back!

[andor3]

Sept 15, 2008: Black Monday. Hold on to your hats.

[Michael Arnold]

Run for your life.

[nwihoosier]

Peace and Love
Tuckerdmbfck, you have no clue. Are you aware that you are clueless?
Peace and Love

[occams_taser]

Phil Gramm and Bill Clinton together made sure the Economic Hit Men hit America. And this is the result.

Didn''t Marx say a capitalist will sell you the rope to hang him with? Well, the correct analysis is that a capitalist will buy a government official in order to get rid of government regulations against it, in order that he may hang himself!

[missingamerica]

"Several private-equity firms were also believed to be interested in Lehman''s assets."

''Tis those "private equity firms" who, in demanding ever higher returns, force corporations to go offshore in search of cheaper labor.

''Tis those "private equity firms" who, through their purchase of influence among the Republican Party, helped bring about the lax and absent regulation that created the level of corruption that has lead to the fallout we see now.

''Tis those "private equity firms" who take profitable corporations and tear them apart to squeeze more money out of them, and when they are reassembled, things like pensions and healthcare plans are gone.

Turning Lehman over to "private equity firms" is truly opening the henhouse door for the convenience of the fox.

[andor3]

"Government don''''t need to be the all seeing eye and control... All they have to do is start tossing these guys in jail."

helloo? government is who sets and enforces the laws. Tossing these guys in jail is government control.

[andor3]

wait a minute... we all know the system, especially under Bush and Co., is run for the rich. So just figure out how this benefits them.

My bet is millions of Americans are about to lose our retirement savings. They warned the system would fail unless they could steal the funds from Social Security in a "privitization" coup.

[shanev137]

Don''t worry...Bailout Bush will take care of you.

[ajaxtheleast]

At my level,,,"What, me worry.!??

What''s the difference between something being

there to trickle down and it doesn''t trickle down

and nothing being there to trickle down

and nothing trickles down.??



One might think that it would take two or more American Presidents to leave behind countless
war crimes, the disapation of our national
credibility, the animosity of the world
and the destruction of the American
financial system as a legacy.

[republic1776]

Once word gets out about Chads new "roomy" Bubba who left a candy bar under his pillow.
Wallstreet will sart playing nice, out of fear.

[republic1776]

Government don''t need to be the all seeing eye and control.
Our Government is bloated as it is.
All they have to do is start tossing these guys in jail.
The market will straighten out real fast.

[cbsblogger]

This is the fault of an administration with a philosophy that banks and corporate America should have free reign to do their thing without any restraints or controls from government. We see other results regularly with dangerous drugs, no labeling on country of origin, and financial companies that police themselves.

Wait until investors discover that the mutual fund companies have been running without any SEC oversight and the same way and all those statements and quoted NAVs aren''t worth the paper they are printed on.

[whitemale08]

Lemon Brothers is gone and so is the entire Global Financial System!

We are living in some very very critical times and stagflation worse then the 70''s has already set in.

Now it''s time for hyper-inflation in the style of Zimbabwe and Weimar Germany before WWII. This will be triggered by Hank the Snake Paulson on Sept 30th to kick-off the Fannie and Freddie Bailouts.

Brace yourselves if you haven''t already and buckle your seat-belts because we''re headed for a New Dark Age!

[republic1776]

This is the fault of Congress.
Nobody will go to jail.
They will all walk away with their pockets full of cash.
Payback time...
Clinton days of smoking the books are here.
Keep voting for the same two parties.

Bob Barr 08
REAL CHANGE

[mortgagemom1]

WHEN THE FEMALE EMPLOYEES COMPLAINED - THEY WERE TREATED LIKE THEY WERE IGNORANT. THEY ONLY BELIEVED IT WHEN THE MEN COMPLAINED. IF YOU WENT TO HR, THE MALE BOSES WERE PROTECTED. THEY LIED! THEY WOULD HARASSE YOU, YOU WOULD REPORT THEM, THEY WOULD GET YOU IN HR AND LIE, THEY ALWAYS PROTECTED THE GOOD OLD BOYS. WOMEN HAD NO VOICE.

[mortgagemom1]

LEHMAN''s also - knew they were having service problems. when the employees complained, they hide the problems. They also would not allow employees to holed second jobs, do volunteer work, etc.. you had to be married to lehmans. If your child got sick, you were forced on FMLA -even if you had 3 weeks of vacation time. THEY DESERVE TO GO DOWN

[mortgagemom1]

Lehman''s new they were buying bad paper! They created it, forced their a/e''s to sell it. If they didnt sell, it they harassed them, demoted the good managers and kept hiring more HEARTLESS MALE MANAGERS the slimball''s -outsorced to INDIA to save money -yes that was our AMERICAN homes loans out sorced to INDIA.
IF you complained - they treated you like an idiot and ignored the problem. Hired people who didn''t know what they were doing. Treated experienced people liked dirt. If you told the trueth - you were blackballed and without a job.

[credibility2]

Let''s not forget the stupid little person with flimsy and risky credit histories actually thinking they were entitled to get any type of mortgage just because they were breathing air and who also didn''t even bother to seek legal counsel as to the propriety of their too good to be true mortgage loan. They also contributed to this sinking ship. None of the CEOs or other executives of these firms should get anything, including the investors who did nothing to self-regulate. The perfect storm is starting to really drop some nasty weather on all of us, including the global markets. The DOW futures are already below 250 and it''s hours before the markets start active trading in this country and elsewhere.

[culturechang]

I still ask what good is (was) all the mortgage insurance premiums paid during the past 20 years? Wasn''t that supposed to mitigate the bank''s risk. Why aren''t these "policies" being called upon OR were these premiums just lining someone''s pocket?