The 158 year old Wall Street firm that started the US cotton trade before the Civil War and financed the railroads that built the nation might soon fade into history. Just days after Richard Fuld, the chief executive, tried to pitch Wall Street on a plan to save the firm by shrinking it, he was now in complicated negotiations with potential buyers that could see the company sold in pieces as soon as tomorrow night, analysts said.
"Nothing short of a miracle can save Lehman as is," said Anthony Sabino, professor of law and business at Saint John's University. "It is highly unlikely Lehman will be in existence on Monday morning." Late last night, the Federal Reserve Bank of New York held an emergency meeting with top Washington policymakers and major financial institutions to discuss Lehman's future. Attendees included Henry Paulson, the Treasury Secretary; Christopher Cox, chairman of the Securities and Exchange Commission; and Timothy Geithner, president of the Federal Reserve Bank of New York.
Michelle Smith, spokesman for the Fed, declined to disclose what financial institutions participated or whether the group had reached any conclusion. The Wall Street Journal reported on its web site that the group included chief executive John Mack, the chief executive of Morgan Stanley, and Merrill Lynch chief executive John Thain, among others. Other financial firms could swallow portions of Lehman's investment banking or bond trading business, analysts said. Considering the firm's deep financial problems, riskier assets like its mortgage and property portfolios could be sold for just pennies on the dollar.
Potential buyers, all have which have as yet to comment, include Bank of America, Barclays, Nomura Securities, BNP Paribas and Deutsche Bank. Yesterday, Lehman's stock closed at US$3.65 (Dh13.4) - an all-time low and down nearly 95 per cent from its high of $67.73 as investors grew more convinced that Lehman may be auctioned at an undervalued price. * National staff with AP
