Lehman Brothers Bankruptcy

Lehman Brothers said he intends to bankruptcy, but the Chapter 11 will not apply to the filing of its broker-dealers and other units, including Neuberger Berman.

Lehman [LEH 3.65 -0.57 (-13.51%)] shall consider the sale of its broker-dealer and is in advanced talks with several potential buyers of its investment management division.

Bankruptcy is the end of a 158-year-old who survived two world wars and the collapse of Long-Term Capital Management, but could not survive the global credit.

Investors in recent weeks increasingly worried Lehman 46 billion dollars of mortgages and asset-backed securities, and its credit rating and ability to raise capital.

Officials of the Federal Reserve and U.S. Treasury steps to reduce the risks to the system and ensure the proper functioning of markets in the United States at the opening Monday. And the Federal Reserve has also agreed to accept lower quality assets in exchange for loans from the government.

Establish banks $ 70 billion credit facility

In addition ten Wall Street banks have decided to make a provision for guarantees on loans, and committed to fund $ 7 billion.

The banks Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley and UBS. These banks have said they are committed to the funding of $ 7 billion each for a total of $ 70 billion in loan guarantee facility.

The banks say that they work together to help maximize liquidity of the market by means of continuous commercial relations, dealer credit terms and committed capital markets. This will also include orderly resolution of derivatives traded on the counter between the Lehman exhibition and its counterparties.

The ten banks say they intend to use the Federal Reserve SVT credit extended this week. The banks say their actions reflect "extraordinary environment."

Wall Street is preparing for Monday Grim

Wall Street traders returned to their offices Sunday afternoon to prepare for the impact on the market a package of bankruptcy and the interrogation of Lehman stock of approximately $ 700 million.

A Wall Street trader involved in discussions with officials of the Federal Reserve said that each company has given their exposure to Lehman Sunday morning and prepare for federal assistance in the outcome of the operations.

But Fed officials have said they will not participate in such a relaxing - they said the Wall Street firms themselves to determine what the best way to business with Lehman.

Bank of America sent a note to the operators derived Sunday saying: "Banks, brokers Lehman began clearing operations by 2 pm today ... net trades from the bankruptcy of Lehman midnight." The memo continued: "If a bankruptcy Lehman , Clearing transactions to be canceled, "namely the Bank of America Lehman hypothesis on the side of the trader would end.

"This is a way to the press before Wall Street opens tomorrow. The more they can the amount of the brokerage Lehman's book, the least bad heart, will counterparties as the files Lehman," Carlos Mendez, CEO of CPI Capital in New York .

The International Swaps and Derivatives Association has a special session from 2 pm to 4 pm, but traders said it was purely symbolic. They intend to trade through the night.

The cost of insuring the obligations of the investment bank blew in trading on Sunday.

Barclays withdraws

Earlier in the day, the United Kingdom to Barclays Bank's withdrawal from talks to buy Lehman. Barclays, which was regarded as the main candidate to buy Lehman would have been unable to agree on safeguards to protect against possible losses.

Top Wall Street executives arrived Sunday for another round of talks to resolve the crisis Lehman, and sources said the group has continued to work on how to deal with the possibility of an agreement not to do before Monday.

In mid-morning, Federal Reserve Chairman Ben Bernanke would have been involved in several telephone conversations with senior Washington officials gathered at the New York Federal Reserve. In addition, Bernanke said he made several calls to foreign central banks to carefully monitor the procedure.

New York Federal Reserve President Tim Geithner and Treasury Secretary Hank Paulson was already on the Fed in New York when the senior Wall Street firms have begun to arrive.

Working the night to a written agreement Saturday to a consortium of banks Lehman support of the bad assets and sell the rest of the bank to Bank of America and Barclays. But sources said key elements of the transaction remains controversial Sunday morning. As indicated, the support of the banks' bad loans are balking at the amount of capital required of banks and they have supported a large part of Barclays and Bank of America.

The largest group was divided into several working groups to develop responses to different results. Among them is the way markets can prepare for the possibility that Lehman could not find a buyer before Monday.