A Bailout for Lehman? Not Likely


As the prospects for government help dwindle, beleaguered Lehman Brothers races to find an acquirer to avoid collapse

It's looking as though Lehman Brothers (LEH) may not be able to count on the federal government for any help in its hour of need, and that has all of Wall Street shaking. Shares of Lehman sank deeper into penny-stock territory on Friday, Sept. 12, as the beleaguered, 158-year-old firm races to find another bank to buy it in a bid to stave off collapse.

On Friday, Lehman's stock fell 13.5%, to $3.57, continuing a death spiral that began on Sept. 8. Now that Wall Street has concluded Lehman CEO Dick Fuld won't be able to pull off his previously announced plan for shoring up (BusinessWeek.com, 10/10/08) the balance sheet, it's become a race against time for Fuld to find a buyer—at any price. The speculation on Wall Street is that Bank of America, Barclays, and a consortium of private equity firms are the most interested suitors.

But it's not clear if any of those potential buyers will want to do a deal with Fuld, as long as the acquirer must also take on some $30 billion in rotting commercial real estate assets that Fuld was planning to unload. Sources close to Treasury Secretary Hank Paulson, according to financial wire service reports, have said the federal government is unwilling provide any additional help to Lehman beyond allowing it to continue borrowing short-term money from the Federal Reserve—something the firm has been able to do since the spring.

A Lehman spokesman declined to comment.

Nothing Guaranteed

When JPMorganChase (JPM) agreed in March to a shotgun marriage with Bear Stearns (BusinessWeek.com, 3/17/08) to save that investment firm from collapse, the Fed guaranteed up to $29 billion of Bear's bad mortgage-related assets. The Fed backstop gave JPMorgan CEO Jamie Dimon enough security to risk taking on Bear. This time, however, it doesn


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