Have fun tomorrow,boys....Lehman may face failure, Merrill may be bought
Sun Sep 14, 2008 6:54pm EDT
*Talks to sell Lehman falter, Barclays pulls out
*Concerns grow that bankruptcy filing may be imminent
*Bank of America may buy Merrill -- report
*AIG expected to sell assets --report
*Emergency Sunday trading session set (Recasts, updates throughout, adds reports on Merrill, AIG)
By Dan Wilchins and Glenn Somerville
NEW YORK/WASHINGTON, Sept 14 (Reuters) - The ruptured U.S. financial system was facing an unprecedented shakeup on Sunday that could lead to the failure of Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz), the takeover of Merrill Lynch & Co Inc (MER.N: Quote, Profile, Research, Stock Buzz) and big asset sales by big insurer American International Group (AIG.N: Quote, Profile, Research, Stock Buzz).
The developments may indicate Wall Street and Washington are accepting that massive triage is necessary in the face of the 13-month old credit crisis and destructive U.S. housing bust.
"The U.S. financial system is finding the tectonic plates underneath its foundation are shifting like they have never shifted before," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey. "It's a new financial world on the verge of a complete reorganization."
The focus on Sunday had initially been on whether talks between regulators and Wall Street's top bankers could lead to the sale of Lehman, which until recently was the fourth-largest U.S. investment bank.
However, those talks faltered when Britain's Barclays Plc (BARC.L: Quote, Profile, Research, Stock Buzz), which had appeared to be front-runner to take over Lehman -- excluding its toxic mortgage-related assets -- said it had pulled out of the bidding.
That triggered expectations the investment bank is heading into bankruptcy and prompted a rare emergency trading session on Sunday to allow Wall Street dealers in the $455 trillion derivatives market to reduce their exposure to the firm.http://www.reuters.com/articlePrint?art ... 6120080914