Mr. Fuld stayed in his office from 7 a.m. until after midnight on Saturday and on Sunday, calling regulators, potential buyers and his own team. But his options were fading. Even promising talks with Barclays, a British bank, were running aground.
Late in the day on Sunday, Mr. Fuld learned that the Fed would expand its lending by allowing banks to post a wider variety of collateral, and that the banking industry had cobbled together a $70 billion lending pool.
According to people briefed on the conversations, Mr. Fuld implored the regulators to let Lehman have access to those new funds — a move that he believed would have saved the firm. No, he was told: these measures are to stabilize the market in the aftermath of a Lehman liquidation, not to prevent it.
In fact, the pool was intended to help Merrill, industry participants said. Ironically, though, Merrill wouldn't need that capital because it was completing its deal with Bank of America.
Regulators and bankers tried to wait for Lehman's bankruptcy filing before announcing the two new lending options. But by 10 Sunday night, Lehman still hadn't filed, because Mr. Fuld was still trying to do a deal with Barclays.
After Barclays fell through, Mr. Fuld directed his lawyers at 12:30 a.m. Monday to file for bankruptcy. Within hours, Mr. Thain announced his deal.
On Wednesday, Barclays offered the bankruptcy court $1.75 billion — far less than Lehman wanted for that firm's core capital markets and investment banking business, its headquarters and two data centers.
And with each day the drama continues. On Friday, the rumor mill was speculating that a huge market rebound sparked by the federal bailout of Wall Street might mean that Merrill wouldn't need to sell itself to Bank of America.
JPMorgan turned out to cut 60% of Bear's and around 4,000 of itself. The street can expect to see more after this wave of failure, bancurpcy, takeover, merge.....