The stock is currently down over 45%.   Do you think the Fed is gonna bail them out too?  It seems like a pretty popular thing to do these days.   I wouldn't be surprised to see another Sunday evening announcement.

LEH has a problem in that their sub-prime and Alt-A portfolio is going to eat them alive. To answer your question! They could sell their brokerage arm to HBC for 20 dollars a share but it will not be enough to cover their losses.

The Fed would be well advised stop trading on C, LEH, MER and liquidate their portfolios. They will have to eat the insured deposits, but then they could hold all the loans in Ginnie Mae and now the other two. Otherwise we will be taken over by a country like China and they will own our property when the loans are sold at 5 cents on the dollar. By spending all this money Stimulus and FNM and FRE we put ourselves in a position where we cannot save ourselves.

They won't allowed to fail (in my opinion)... nor will Citi or Merril.   At this point,  I think that's quite clear.

From Bloomberg:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aEPLmab2KfHU&refer=home 

Fed spokeswoman Michele Smith declined to comment on Lehman. Treasury spokeswoman Jennifer Zuccarelli said, ``We are monitoring markets and in regular contact with market participants.'' 

Tranlsation: We're trying to negotiate something similar to Bear Stearns

Credit Default Swaps up 135 basis points just today alone.     I'll stop with the play by play now ;)

Won't be allowed to fail is just some silly talk. FNM and FRE Failed. Stock ZERO eventually. So are we talking stock prices here? The bond market is over 180 trillion dollars. Their is 32 trillion dollars in circulation. So unless we print a whole ton of money the government is powerless over the whole thing. Zimbabwe has a million % inflation. We need a depression and to clear the credit markets and really sit down a craft a new simplified set of rules. If people cannot afford to buy a home without a depression in prices they will still not be able to afford to buy a home. It really is that simple. Instead we keep offering no money down mortgages? Did you know that their are 3 times as many people charged with mortgage fraud this year than last?

I need you to think about this for a minute. We have the power to stabilize things for what? It will sink in slowly because people think this is all beyond them. You go to work and pay your taxes and it is some other persons concern. Like I have said before I went into a deep depression last August when I realized what was happening. Then when I explain it to people mathematicly they say it is beyond them or you lost me at... it is not beyond you. It is a simple as 2+2=4 and it is not sophisticated. We have been ripped off. If you get half your pension that will be lucky 725 SPY is coming. Banking may become nationalized, would be my first thought! But the government cannot run anything. We are seeing the tip of the Iceberg. Eventually everything will be frozen and there will be no trading. There needs to be an orderly exit. Only who is going to run it? We already know wall street is incapable. We are writing history here my friend because we have a fiat currency and we are the leader of the financial markets of the world.

C is leveraged at 43 to 1. That means for every dollar they have they lent out 43. So 1 divided by 43= 2.33% So if a loan fails they typically get back 70 cents on the dollar. However they have been getting on average 50 cents because of the over extension of home values. So for every loan that fails they lose 50% so 2.33% X 2= 4.66% or 100% of Citibank's money. Mortgage rates are failing at 9% twice as much as what would cause C to fail. Commercial loans typically fail at a higher rate so they charge more interest. Anyway it is the leverage that will kill them. Eventually like Enron they will run out of money, borrowing money from Peter to pay Paul. With out new capital to invest business cannot grow and new business cannot bloom. That is why it is like a downward spiral gaining momentum once it starts. We have lost control and it is out of hand. So some people in congress need to make some decisions.

Clearly banks should be leveraged no more than 14 to 1 as originally crafted after the great depression.

Battered Lehman to announce 'key' initiatives
Tuesday September 9, 7:08 pm ET

Lehman Brothers will announce third-quarter results, strategic initiatives early Wednesday

NEW YORK (AP) -- Lehman Brothers says it will unveil a set of "key strategic initiatives" early Wednesay as the embattled investment bank faces down investor concerns that it's running out of options to raise badly needed capital.

The announcement from Lehman late Tuesday came on the same day investors drove the company's shares down 45 percent to their lowest level in more than a decade.

The bank also said it would announce its quarterly results early Wednesday, a week ahead of schedule. It is expected to report a multibillion dollar loss.

"By spending all this money Stimulus and FNM and FRE we put ourselves in a position where we cannot save ourselves."

Snowman - are not we already in such position?

Snowman,  I couldn't help but smile at your silly talk comment.  My dad use to say the same thing to me when I speculated about far fetched things growing up. 

 When you asked "are we talking about stock prices here".   My answer is no.  I guess I should clarify by what I mean by failure. When I say the Fed won't let them fail,  I'm thinking more along the lines that they won't let them default on their bonds or file for bankruptcy.  That doesn't mean the shareholders might not walk away with something in the end (if they negotiated something like they did for Bear Stearns).   

 http://blogs.wsj.com/deals/2008/09/09/should-the-fed-step-in-to-help-lehman-can-it/

I appreciate your well thought out comments.  I agree, Fannie and Freddie did fail (mandated to maintain a market for mortgages and maximize profits for shareholders).   

When you say "If people cannot afford to buy a home without a depression in prices they will still not be able to afford to buy a home".    It really is that simple.   Is it really that cut and dry?     A depression in prices doesn't  dictate whether people or not can afford a home.  It just effects what you get for your money. I see it more as a standard of living adjustment.  If prices are depressed,  you get more home for your money (you can substitute more with better location, or better quality).  If they're not depressed, you get less for your money.     You can make minimum wage and still afford to buy a home somewhere  (may not be that pretty though).   Maybe just more silly talk on my part.  I'll be the first to admit I'm no expert on this type of stuff.