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Lehman Brothers seeks a buyer

(Agencies)
Updated: 2008-09-12 16:13

The once heavyweight Wall Street investment bank, the Lehman Brothers, is said to vehemently look for a buyer, after it has failed to spin off its sections of business and find institutional partners which could offer a life-saving money line.

As confidence in the company continued to dry out Thursday and Friday, the investment bank, with 158-years old on Wall Street, reached out to several potential buyers, including Bank of American and Barclays, a big UK bank, the news agencies reported quoting sources familiar with the negotiations now.

Sources said the Lehman hoped to strike a deal within a few days. Meanwhile, help with the US Federal Reserve, the American central bank, was being sought in order to make an acquisition palatable, just as the Federal Reserve oversaw the previous sale of another broken Wall Street investment bank, Bear Stearns, earlier in 2008.

And, US officials are evaluating what the potential hazards and loopholes will crop up if Lehman is left to collapse, that might batter the broader financial market.

On Thursday, even though Lehman's share price fell $3.03 to $4.22, leaving it down 94 percent this year, the shares of other financial companies stabilized after days of losses.

Lehman, which employs 25,000 people around the world, tried to convince investors on Wednesday that it could survive on its own by selling divisions and spinning off commercial real estate assets, but its stock continued to decline.

Lehman, whose roots date to its founding as an Alabama cotton exchange in the 1850s, got into trouble by expanding aggressively into the financing of real estate, including sub-prime mortgages.

When the mortgage crisis first flared, many Lehman executives, and others on Wall Street, believed the crisis would be short-lived.

But in March, the shock over Bear's rapid collapse took its toll on Lehman.

The stock went into free fall and the cost of buying protection against the default of its bonds soared. The turmoil at Fannie Mae and Freddie Mac and the continued deterioration in the housing market put further pressure on Lehman through the summer.