From the WSJ:
The investment bank Lehman Brothers Holdings Inc. spent Thursday energetically shopping itself to potential buyers — among them Bank of America Corp. — just a day after insisting it had found a way to patch up its massive real-estate-related losses.
Given the firm’s deep financial troubles, a deal of any sort is far from certain, according to people familiar with the situation. In addition, prospective buyers, which also could include Barclays PLC, would likely want the U.S. government to help shield them from future losses from any such transaction, these people said, as happened in March, when Bear Stearns Cos. was forced into a deal to be acquired by J.P. Morgan Chase & Co. In that deal, the federal government agreed to absorb as much as $29 billion in potential losses.
In yesterday’s post, I said that there was no reason for the Fed or Treasury to get involved. That seems to be their position as well (via WSJ):
The federal government will not use any money to assist Lehman Bros. beyond the liquidity facilities already available to the struggling investment bank, a person familiar with the matter said.
The Treasury Department and the Federal Reserve have been working with Lehman to resolve their problems, including talking to potential buyers of the bank. But Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke don’t see a need to structure a Bear Stearns-like rescue, in large part because Lehman has access to the Fed’s discount window and can borrow money to roll over its short term debt. Lehman’s troubles have also been well-known for a while, giving market participants “time to prepare,” this person said.
If the potential buyers all want government participation and the government won’t provide it, then the likelihood of a deal is fairly low. Can LEH make it without help? That’s doubtful, but at least for now it seems that others on the street are still doing business with them. They might just struggle along with a low stock price if they have sufficient liquidity.