Will Lehman be forced to break up?

September 14, 2008

The forced breakup of Lehman Bros. or even its liquidation became a possible scenario over the weekend as talks dragged on unsuccessfully Saturday between top U.S. financial officials and executives at major Wall Street firms trying to forestall the collapse of the investment firm and to keep weakness among financials from spreading.

According to a report in the online edition of the Wall Street Journal citing people familiar with the matter, the outlines of a rescue plan emerged, but at the same time talks revealed that a sale of the entire firm to a big bank could probably not be managed.

The Federal Reserve Bank of New York, Treasury officials and banking executives have been meeting since Friday evening in the hopes of engineering a plan for a private-sector rescue for the once-venerable investment firm before Asian markets open for trading Monday.

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