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.