If you thought Long Term Capital was a landmark chapter in Wall Street history, the current situation with Lehman will take up volumes. With meetings at the New York Fed going late into Friday night, restarting on Saturday, and then scheduled to resume again on Sunday, saying that things are fluid is an understatement. While different media outlets are reporting different stories, CNBC.com is reporting that Wall Street firms are pitching in $3 bln each to set up a 'bad bank' for Lehman's real estate assets.
This would pave the way for a sale of the firm, and give the Street at least a temporary reprieve from the credit crisis. As the article stresses, however, the plan is still being drafted, and the deal could collapse at any time. Perhaps the most ominous part of the article is the line from an anonymous source who says that, "I'm thinking logically; if they do nothing it's Armageddon."