Whither Lehman?

It will be an interesting weekend on the financial front to say the least as the world awaits news on the fate of Lehman Brothers. A noteworhty tidbit: Federal officials are telling Wall Street not to expect any government support for a takeover of all or part of the investment bank. Good for them. Market players created this mess; they should figure out how to solve it. Of course, if push comes to shove, we'll have to see whether the government stands its ground. Here's an update on the situation from the Washington Post this morning:

"Senior federal officials met last night with leading Wall Street executives to discuss the potential sale of ailing investment bank Lehman Brothers and review how an acquisition could affect those doing business with the firm, according to sources familiar with the discussions.

"Attending the emergency session at the Federal Reserve Bank of New York were Treasury Secretary Henry M. Paulson Jr., Securities and Exchange Commission Chairman Christopher Cox and New York Fed President Timothy F. Geithner, federal officials confirmed. They were joined by chief executives including John Thain of Merrill Lynch, John Mack of Morgan Stanley, Lloyd Blankfein of Goldman Sachs, Jamie Dimon of J.P. Morgan Chase and Vikram Pandit of Citigroup, sources said.

"An official of the New York Fed said the meeting had been called "to discuss recent market conditions," but declined to offer further details. Other sources said the discussions centered on a wide range of issues that would arise for Lehman's trading partners and other business associates if a rescue were launched. The sources spoke on condition of anonymity because of the sensitivity of the negotiations.

"Financial problems at the nation's fourth-largest investment bank have eroded shareholder confidence, sending Lehman scrambling to find a buyer. One major stumbling block has been the role that the government might play in such a deal.

"Federal Reserve and Treasury Department officials have pressed for a privately funded solution, while suitors for Lehman have insisted on a government guarantee that they would be protected against any losses arising from toxic assets on the bank's books, according to sources."