Lehman Brothers, one of Wall Street’s biggest and oldest names, was close to filing for bankruptcy on Sunday night after a rescue plan for the stricken investment bank was seriously undermined when suitors Barclays of the UK and Bank of America walked away earlier in the day. Barclays pulled out after the US government refused to provide a guarantee to enable Lehman to continue trading until a deal had been completed. A bankruptcy filing could cause thousands of job losses among Lehman’s 25,000-strong staff. On Sunday night, some employees were seen leaving Lehman’s Manhattan headquarters with boxes of possessions. In a separate move, regulators prepared the ground for a Lehman bankruptcy by asking its derivatives counterparties to settle trades between themselves in a special afternoon trading. Merrill’s decision to enter talks with BofA, which has long coveted its rival’s large retail brokerage business, came after it became apparent that Lehman’s woes could spread to the rest of the investment banking sector in the coming weeks.
