Update: CNBC is reporting that the deal is done at $2 billion.

Barclay’s didn’t buy all of Lehman because they couldn’t get a US government backstop for the bad assets. Now that Lehman is in bankruptcy, they are negotiating to buy the part they really wanted (via the WSJ):

LONDON — Barclays PLC was close to a deal to acquire a large chunk of Lehman Brothers Holdings Inc.’s U.S. operations for just under $2 billion, according to people familiar with the situation.

What are they buying? They are apparently looking at the US broker dealer plus some other items:

Barclays’ acquisition of Lehman Brothers’ U.S. operations is expected to include Lehman’s Seventh Ave. office in mid-town Manhattan, say people familiar with the matter. The office tower has more than one million square feet of office space. Two data centers in New Jersey will also be part of the transaction, negotiated by a team of about 100 people over the last two days.

Lehman’s Canadian operations will also be included.

They don’t appear interested in the European ops:

For now Barclays is targeting only the U.S. broker arm, although bankers in Lehman’s European arm, which is headquartered in London, are holding out hope the acquisition would include the London operations, including investment banking and stock sales and trading. But for now, Barclays’ main goal is to complete a deal for the U.S. arm.

Why would they? They have a European investment banking company.

Barclay’s did the right thing over the weekend by walking away. Now they can get the parts they want without taking the dreck too.