U.S. forces Lehman into sales talks, no bailout yet

by Tina Kells | September 11, 2008 at 03:51 pm

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The United States government is doing damage control by forcing Lehman Brothers Inc into talks with potential investors, as the investment bank's stock prices tumbled Thursday. The U.S. government is trying to ward off the necessity for a Fannie and Freddie type bailout.

Lehman and U.S. regulators were in intensive discussions about a number of options, including a complete sale, but the firm was resisting government intervention, a source with direct knowledge of the talks said.

Even so, media reports said the government, including the Federal Reserve, was helping to broker a deal to sell Lehman that could be completed as soon as this weekend.

Possible buyers include the Bank of America Corp and Barclays; all parties declined comment. Along with pressure from the government, Lehmans is facing the wrath of unhappy investors. Jittery investors caused the stock to drop 42% in one day as the scrambled to sell off their holdings.

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