[Sellorect]

http://www.nytimes.com/2008/09/12/bu...loyees.html?hp

For Lehman Employees, the Collapse Is Personal

In the last few days, employees of Lehman Brothers have wrung their hands as the value of their stock evaporated before their eyes. Now, many fear losing their jobs, too.

In scenes eerily reminiscent of the final days of Bear Stearns, the megawatt energy within Lehman Brothers has dimmed to a hum as employees focus on the fate of the firm and what it might mean to them. To make matters worse, pink slips for previously announced layoffs were being handed out this week.

“Everyone is walking around like they have just been Tasered,” said one Lehman employee, who, like many interviewed for this article, declined to be named because he was not authorized to talk publicly. “Everyone was always hoping we would pull through. Now, that is not really an option.”

On Lehman’s third- and fourth-floor trading floors overlooking Broadway’s lights in Midtown Manhattan, traders continued working at their terminals, or at least were giving the appearance of doing so. At the same time, many polished their résumés and contacted recruiters.

If Lehman is sold — as now appears likely — the buyer will fire many of them. And they know that tens of thousands of other Wall Streeters laid off in the tsunami sweeping the financial industry — including many recently let go from Bear Stearns — are already chasing after too few jobs.

Wall Street is used to ups and downs, but this latest round of cuts brought about by the credit crisis is turning out to be one of the worst in recent memory — a fate compounded by a shrinking economy. As of June, many of the more than 83,000 employees dismissed from banks and brokerage firms worldwide have come from firms based in the New York area.

Everyone at Lehman knows what happened at Bear Stearns: Star employees did not have a hard time finding work when Bear was sold in a fire sale this year, but JPMorgan initially kept only about 6,500 of 13,500 employees. Many are still looking for work.

As at Bear, many at Lehman have taken a hit from a plummeting stock price. From an all-time high of $86.18 a share in early 2007, the stock has plunged, closing at $4.22 Thursday.

In an arrangement that is typical of Wall Street, Lehman employees have gotten much of their pay in stock and stock options in recent years. That figure could range from 10 percent to 60 percent in Lehman stock, according to a person close to the company.

“Over the past decade an increasing amount of the compensation had been given in stock and stock options,” said Robert Willens, a tax expert who worked at Lehman from 1987 to this year. “Employees were paid in restricted stock that took several years to vest. Stock was granted at the current price.”

As recently as last week, Lehman’s stock was selling for $16 a share, and many Lehman employees were still betting that their chairman and chief executive, Richard S. Fuld Jr., would figure out a way to salvage the bank, and their future — a hope he reinforced Wednesday with assurances to Wall Street that the firm could remain standing alone.

On Thursday, those hopes ran dry as the share price plunged so low and so fast that potential suitors came out of the woodwork to see if they could snap up the 158-year-old institution for a bargain-basement price.

As employees left the firm’s Seventh Avenue headquarters Thursday, a Lehman trader said people were trying to keep a stoic face. “They are not showing anything,” he said.

As widely respected and liked as Mr. Fuld has been at the firm, now that the cold prospect of losing a life savings in Lehman stock has become more of a reality, many employees have grown resentful.

“We feel like we have been controlled by events and haven’t controlled them,” said one rank-and-file employee. “And it has just been the most punitive market. Is there frustration with the management team? Of course.” Another employee who left Lehman earlier this year lamented that he had put enough faith in the firm to retain shares — a decision he is paying for. “My children’s education fund is wiped out,” said this person.

“I’m not a millionaire like a lot of these guys. Of course this is on Dick’s hands,” he said, referring to Mr. Fuld. “It all happened on his watch.”

The investment bank said that Mr. Fuld was not available for comment.

A number of Lehman employees said the widespread support at the firm for Mr. Fuld was not as strong as it had been, largely because his strategy to save Lehman, including the partial sale of Neuberger Berman, its money management unit, would not be enough. These people said they had expected and hoped that Mr. Fuld would step aside Wednesday and let Herbert H. McDade III, the firm’s president, ascend and start anew.

Mr. Fuld himself has seen much of his wealth disappear. At the stock’s peak, his 11.4 million shares of various types of stock and 2.5 million stock options were worth about $956 million, according to James F. Reda Associates, a consulting firm. Now, they are worth only about $40 million. But employees know that Mr. Fuld has reaped rich rewards in his decade and a half at the helm.

Even if he loses his grip at Lehman, he stands to collect more. He does not have a severance agreement if he loses his job, but if he were terminated without cause, Mr. Fuld could expect to collect a $16 million pension and $5.6 million in deferred compensation. Lots of good people there.

[Pelefaifs]

They iz gonna make it to teh weekend!

[enasseneiff]

Originally posted by Colon™
They iz gonna make it to teh weekend!

[Golotop]

Originally posted by Victor Galis
Well, I interned there in summer 2007. I'm kind of glad working there now didn't become part of my long-term plan. Ooo.

I was there summer 2007. Were you in the seventh ave location?

[bp9QxekG]

Originally posted by Asher

Ooo.

I was there summer 2007. Were you in the seventh ave location? I was in the 1301 6th Ave. one, so mercifully I didn't have to wear a suit jacket at all times.

[reachmanxx]

What group did you work with?

[JakilSong]

Merrill

Edit: No. Merrill's already wrecked. They have no use for your services.

[DrKirkNoliss]

Originally posted by DanS
Merrill

Edit: No. Merrill's already wrecked. They have no use for your services. It's looking like Barclays will be my next victim so far. But I'm tied up the next week teaching a seminar. I'll keep you updated so you know to divest yourself...

[oxixernibioge]

Keep it in your matress.

[enlinnyGoob]

Lehman was a pretty cool Secretary of the Navy.

600 ships!

[Fgunehjf]

Originally posted by DanS
Once you start working for a Berkshire Hathaway subsidiary, I will know all is lost and will move into 100% cash. Please do inform me once that becomes a fact, sounds like a good moment to dive in.

[beatrisio]

Who's gonna loan them the money? The investment banks are still working through the indigestion from trying to unload the bonds from the last few years of private equity activity.

[mygalinasoo]

Originally posted by DanS
Who's gonna loan them the money? The investment banks are still working through the indigestion from trying to unload the bonds from the last few years of private equity activity. Private equity raised big wads of cash before the credit crunch. They still have $450 billion left idle I believe.

[Bejemoelemymn]

edit: Crap. I thought this was dated 2008. I guess it's outdated. Still interesting though.

Originally posted by DanS
Who's gonna loan them the money? The investment banks are still working through the indigestion from trying to unload the bonds from the last few years of private equity activity. Borrowing is starting to pick up. Here's an interesting article by Kevin Warsh, Governor at the Fed. There was a thread on this about a week ago. There's an interesting graph on the site that shows how much cash corporations held before and during the crisis.



Corporate Cash Balances and Economic Activity Governor Kevin Warsh
At the American Enterprise Institute, Washington, D.C.
July 18, 2006
Corporate Cash Balances and Economic Activity

Thank you for the opportunity to speak today on financial conditions and economic activity in the corporate sector. A striking feature of this economic expansion has been the historically high holdings of cash and short-term securities that the corporate sector has accumulated since 2001. But business attitudes seem to be in the process of change--cash has started to decline and borrowing has picked up--so this topic is especially timely.

Today, I will first provide a historical perspective on cash balances at corporations, and discuss some factors that may have encouraged firms to hold such large cash balances during this recovery. I will also evaluate whether these factors are likely to persist. Then, I will discuss the more recent indicators that suggest that the buildup in corporate cash balances may be abating, and offer some reasons for that change. In particular, some of the unwinding of cash balances appear, in part, to be due to a renewed focus on capital spending and other business expansion efforts by executives. This renewal has been spurred, notably, by growing external pressures to boost shareholder value. To be sure, such developments may cause the liquidity and credit quality of some corporations to recede a bit from their very high levels but will not, in my view, put at risk their strong balance sheets or impede the solid expansion of business spending.

I would like to stress that I will not be addressing the immediate economic outlook or the recent conduct of monetary policy. Rather, my comments reflect observations about longer-term trends for business sector activities.1

Corporate Financial Conditions and Cash Balances
In the past several years, we have witnessed a dramatic improvement in the financial health of the nonfinancial corporate sector. This improvement is clearly evident in the low default rate on corporate bonds and the relatively few delinquencies that have occurred on business loans at commercial banks: Both have dropped markedly since 2002 and have remained close to their historic lows during the past couple of years. Likewise, risk spreads on corporate bonds--the gap between yields on corporate bonds and comparable-maturity Treasuries--narrowed from their peaks in late 2002 to low levels in early 2004. Since then, they have hovered around fairly low rates, suggesting that investors continue to have a favorable outlook for corporate credit quality. Despite some recent turbulence, owing in part to geopolitical events, stock prices have logged robust gains over the past 3-1/2 years, and broad equity indices have now retraced most of the ground lost between 2000 and 2002.

Some of the improvement in the financial condition of businesses is due to substantial efficiency gains by firms. Moreover, the resulting robust gains in labor productivity have been well ahead of compensation growth and have dramatically boosted corporate profits. Indeed, profits as a share of sector product--in essence profit margins--jumped to more than 14 percent in the first quarter, the highest level in decades. The improvement in the financial conditions also reflects fundamental changes in firms’ balance sheets. In particular, firms have boosted their liquidity by extending debt maturities, replacing shorter-term debt with longer-term debt; at the same time, they have reduced total leverage. Many firms retired debt using proceeds from equity offerings, asset sales, or mounting profits. As a result, from 2002 to 2004, nonfinancial corporate debt grew at an annual rate of about 2 percent, its slowest pace since the early 1990s.

One of the most striking financial developments since 2001 has been the rapid increase in corporate holdings of cash and short-term securities. Since the end of 2001, the ratio of cash holdings to assets has risen sharply (see exhibit).2 This increase is even more pronounced when (on a consolidated basis) cash is measured relative to investment, defined as the sum of capital spending and research and development (R&D) spending during the preceding twelve months. The ratio of cash to investment has averaged about 60 percent during the past few decades. Generally, it is higher in recession periods, consistent with a strong precautionary savings motive by firms that face costly external financing (Almeida, Campello, and Weisbach, 2004). And, in 2001, the ratio of cash to investment was already somewhat elevated. But the ratio then soared to more than 150 percent by year-end 2004, as investment fell far short of cash flow from operations and net financing. This juxtaposition is unusual when the economy is expanding. Indeed, former Federal Reserve Board Chairman Alan Greenspan pointed to this unusual configuration a year and a half ago. "Although capital investment has been advancing at a reasonably good pace," he said, "it has nonetheless lagged the exceptional rise in profits and internal cash flow."3

Subsequently, aggregate cash holdings remained elevated through much of last year, even as the economy continued to advance smartly. Only in the very recent quarters has this trend seemed to abate somewhat. We are left with an overall picture of a highly liquid corporate sector--perhaps more like that which we would expect of corporate balance sheets in the early stages of an expansion. As policymakers and forecasters, we might ask why corporations have built up such a large stock of liquid assets. Is the buildup of cash indicative of a "new equilibrium"? Is there something about the current economic or regulatory environment that requires the maintenance of high liquidity levels? And, does the current level of liquidity portend a more robust surge in corporate spending?

Partial Explanations for Large Holdings of Cash
Almost by definition, the rise and fall in cash holdings can be linked to fluctuations of operating cash flows and capital expenditures. A simple regression of changes in cash, on changes in operating cash flows, and on changes in capital expenditures--using annual data from 1957 to 2001--accounts reasonably well for historical fluctuations in cash at U.S. nonfinancial corporations, with a regression R-squared of over 50 percent. However, in this framework, the current period appears to be an outlier.4 That is, even after factoring in the current-cycle dynamics of strong profit growth and relatively modest investment, a good part of the rise in liquid assets remains unaccounted for--as much as one half of the total rise in cash-to-assets--according to Federal Reserve staff estimates. A number of explanations have been advanced for this unusual rise, and they have a bearing on judging whether this is a temporary shift born of the current environment or a result of a persistent change in behavior.

Foreign Operations
The first explanation relates to the growing significance of foreign operations of U.S. multinationals in countries with lower corporate tax rates and the recent accumulation of earnings retained by the foreign subsidiaries. When U.S. multinationals receive dividends from their foreign subsidiaries and the host country levies a lower tax rate than the U.S. corporate tax rate, any repatriated dividends are subject to U.S. corporate taxes. Thus, many companies have an incentive to leave those funds with their foreign subsidiaries, even if the funds far exceed plans for foreign capital expenditures. In such circumstances, those funds are often parked in cash or short-term investments overseas and are, thus, less accessible than one might infer from a consolidated balance sheet.

It is difficult to determine whether a corporation’s cash is held at home or abroad, but we know that significant holdings of cash are concentrated at large multinational firms. In particular, the Board staff’s analysis (of Standard & Poor’s Compustat data) indicates that the ratio of cash to total assets at domestic-only companies rose slightly less than 20 percent between year-end 2001 and 2004. At the same time, the cash intensity of balance sheets at multinational companies increased more than 50 percent. Moreover, recent research has demonstrated a strong statistical link between the accumulation of cash and the estimated tax burden from repatriating foreign earnings (Hartzell, Titman, and Twite, 2006).

As a means of unlocking those offshore cash holdings, the Congress and the President provided U.S. companies a one-time opportunity--through the American Jobs Creation Act of 2004--to repatriate foreign profits at a much reduced statutory tax rate. Indeed, Wall Street estimates indicate that many companies have capitalized on this opportunity: An extra $250 billion may have been repatriated during the past four quarters. That estimate appears consistent with the recent pattern of distributions from foreign income reported in the Commerce Department’s international transactions data.

With access to such large holdings of cash, we would expect corporations to disburse an unusually large portion of current cash earnings either through de-leveraging, accelerated dividends, or increased share repurchases. To the extent that any of these firms face financing constraints, the repatriated cash could provide a boost to new fixed investment, R&D projects, or acquisitions. Indeed, during the past few quarters, companies have been raising shareholder payouts and making new investments.

The buildup of cash at foreign subsidiaries could account for a good part of the unexplained buildup in corporate cash--that is, the rise in cash that is not explained by the dynamics of profits and investment. Because we expect that foreign subsidiaries will continue to grow, and because of the ongoing tax liability associated with repatriation, we should not be surprised if overall corporate cash balances remained somewhat higher compared to previous decades.

Focus on Liquidity
A second factor that may contribute to an elevated new equilibrium of cash balances is the renewed emphasis that investors may be placing on balance sheet liquidity, particularly in the aftermath of the commercial paper (CP) defaults that occurred at the end of the previous expansion. At that time, even financially solvent firms faced the prospect that they might have difficulty rolling over their maturing CP. This led investors and rating agencies to scrutinize the ability of firms to manage short-term liquidity events. Consequently, many firms raised cash holdings to mitigate these concerns.

Business Caution
As I discussed earlier, regression analysis suggests that the robust growth in profits and the comparatively modest recovery in capital expenditures leaves a good part of the extraordinary cash buildup unexplained. But that analysis takes capital expenditures as given. In doing so, it sidesteps some of the important questions with which economists and policymakers have wrestled: Why did business fixed investment contract so severely in the most recent recession? And, why wasn’t the rebound from the recession more vigorous, particularly in light of such high profitability? Although this expansion is more than four years old, the ratio of business fixed investment to gross domestic product (in current dollars) is still well below its forty-year average.

Two hypotheses for the behavior of investment have received a great deal of attention. The first hypothesis is that a capital overhang, caused by excessive investment during the previous boom, held back the recovery in capital spending. While it is difficult to measure excess capital, the Federal Reserve Board staff estimates that any broad-based capital overhang was probably eliminated early in the recovery. Of course, more persistent capital overhangs may well have been experienced in some sectors, most notably in telecommunications equipment, though that sector accounts for less than 10 percent of business fixed investment.

Another leading hypothesis is that businesses were more risk-averse than warranted by the underlying economic fundamentals, especially early in the expansion. One obvious source of caution was the degree of conviction about the strength and sustainability of the recovery. Concerns about terrorism and other geopolitical uncertainties were likely at play as well. Although many periods of recovery are accompanied by concerns of economic growth and political turmoil, surveys in 2002 and 2003 suggested that business leaders were experiencing a more prolonged sense of gloom, with measures of sentiment dropping to low levels for as long two years beyond the trough in the business cycle. Since the spring of 2003, however, the economy has been expanding briskly and thus the durability of the recovery should be a less significant constraint on capital expenditures now. Indeed, more recently, some surveys of business confidence and capital spending plans have reached or exceeded the levels of the late 1990s. Nonetheless, concerns about global political uncertainties often reemerge in executive suites and board rooms as important factors for business spending plans.

Regulatory Environment
Still, one corollary of the corporate-caution explanation may have persisted. Many have argued that the conditions created by the corporate governance scandals--and the regulatory response to those events--have contributed to a more cautious attitude toward risk taking. More concretely, the scandals themselves, and the markets’ reaction to them, are said to have caused firms to restrain capital spending. Clearly, Sarbanes-Oxley compliance costs have been substantial, diverting funds and, probably even more importantly, some of the attention of chief executive officers (CEOs) and boards of directors from capital spending and R&D plans. Every meeting that board members and executives spend focused predominantly on compliance issues is, by definition, meeting time generally not being spent on big strategic questions. However, proving the connection between executives’ "mind-share" and capital expenditure rates is difficult. Moreover, firms are benefiting to some degree from reforms arising from Sarbanes-Oxley. Thus, research on the net effects of Sarbanes-Oxley being undertaken by AEI and other institutions should be exceptionally useful as the economic, political, and legal environment continues to evolve. Based on the evidence available to date, I believe that the uncertainty resulting from the regulatory and legal environment has had meaningful economic implications for business investment and cash holdings.

Catalysts for Change
Each of these factors--increased foreign operations, greater investor focus on liquidity, business caution due to geopolitical uncertainty, concerns about the sustainability of the recovery, and a more process-intensive regulatory and legal environment--likely contributed to the buildup in cash through this expansion. But we have recently seen signs that the cash hoarding trend may have abated or reversed. During the past several quarters, the ratios of cash to assets and cash to investment have slipped, and in the first quarter of this year, the ratio of debt to assets edged up. These reversals can be attributed, in part, to the resurgence of share repurchases, the growth in dividend payouts, cash–financed merger activity, and a pickup in capital investment.

The pace of share repurchases accelerated strongly in 2005, especially in the fourth quarter, when they exceeded $400 billion at an annual rate. These accelerated shareholder payouts were to be expected given that repatriated profits from firms’ foreign operations had become available to finance investment, acquisitions, and retire debt.

In addition, signs of changing business attitudes towards expansion have emerged. Merger and acquisition activity picked up markedly in the second half of 2005 and continued to accelerate in the first half of 2006, also contributing to the drawdown of cash. Cash-financed mergers in the past four quarters resulted in a retirement of public equity of more than $250 billion, four to five times the average rate since the peak of the previous expansion. Investment spending is also expanding at a solid pace. Data from the national accounts through the first quarter indicate that domestic real outlays for new equipment and software have been growing at an annual rate of almost 10 percent since the beginning of 2005. Spending on high-tech equipment has been rising at an annual rate of more than 15 percent, several percentage points faster than in 2003 and 2004, with spending especially strong for telecommunications equipment. Outlays for nonresidential construction firmed in 2005 and turned up notably in the first quarter of this year. Not surprisingly, outlays on structures used in energy production strengthened in response to higher energy prices, but the rise in the first quarter also reflected an increase for office, retail, and industrial structures.

At the same time that the growth in cash balances has started to reverse, the pace of debt financing has also picked up. In the first half of this year, the net amount that firms raised from bonds, commercial paper, and bank loans reached its highest level since the current economic expansion began. Unlike the earlier period of this expansion, more of the funds raised of late are being deployed for merger and acquisition activity and other corporate spending. Considerably less is being used to refinance higher-cost debt or to lengthen debt maturities.

The recent signs that cash hoards are being trimmed and leverage is increasing suggest a move towards more normal conditions. These developments may be amplified by increased pressure from shareholder groups in conjunction with a more active market for corporate control. A prominent feature of the current environment is the notable amount of leveraged buyout (LBO) activity. An LBO or the threat of an LBO acts to discipline management to raise shareholder value (Jensen, 1986; Kaplan, 1989). LBOs, and other forms of private equity investment, may force management to implement strategic changes rapidly to restore the firm’s return on equity and boost share prices, in part by increasing financial leverage. LBOs increased sharply in late 2005, and they continued apace in the first half of this year. The value of public equity retired by LBOs has accounted for almost one-third of the total retired from total mergers and is at its highest level since the boom in the late 1980s.

[carpartsho]

Here's an excerpt from a story that Asher may find interesting...

Why don't we standardize the terms of these contracts and set up a clearinghouse? The gov't could be useful in this regard. The article makes it sound like the way CDS are done is a big fvcking mess.

http://online.wsj.com/article/SB1221..._us_whats_news

On Saturday afternoon, the credit-trading heads of major investment banks gathered at the meeting to discuss how to deal with their exposures to Lehman in the intertwined credit-default-swap market. The lack of a central clearinghouse in this market means that dealers, hedge funds and others are directly facing each other in insurance-like contracts that are tied to trillions of dollars in debt instruments.

Credit derivative traders at some firms were asked to come to work over the weekend to help quantify their exposures to Lehman and compile lists of outstanding contracts they have with the investment bank.

One person familiar with the matter said large dealers contemplated showing each other all of their credit default swap trades with Lehman. Disclosing their positions may enable dealers to find ways to offset their positions with each other wherever possible. Later in the day, some traders were told that Lehman -- with the help of Federal Reserve officials -- will try to figure out which of its counterparties have CDS trades that can be offset. Those counterparties would be informed of the offsetting positions, following which they can unwind their respective swaps with Lehman and concurrently enter into new swap contracts with each other. For example, if one dealer has bought a swap from Lehman and Lehman sold a similar swap to another bank, the two banks could agree to face each other directly.

Such moves could help prevent individual firms from scrambling to find new counterparties to rehedge their positions with when the markets reopen on Monday, potentially unleashing turmoil across the credit markets. They could also help facilitate an orderly wind-down of Lehman's derivative positions, if that becomes necessary. Still, sorting out the firm's CDS positions promises to be a difficult and time-consuming task, because many of the contracts have different terms and maturity dates.

It is not known how much in CDS contracts Lehman has. In a survey last year by Fitch Ratings, Lehman was listed among the 10 largest CDS counterparties by number of trades and the amount of debt to which the contracts were tied.

[Aqgkvwzm]

If you can, try to parlay your experience into working on the clearinghouse which should result from all this.

Oh, yes that is known... Apparently, that is info that the WSJ is not privy to.

[serius_06]

Looks like we're going to try the bankruptcy option. To me, this is the best option. Lehman is not too big to fail and there would have been a long line of companies feeding at the trough if Lehman were spared.

The lede from Bloomberg...

Wall Street Prepares for Potential Lehman Bankruptcy (Update2)

By Craig Torres

Sept. 14 (Bloomberg) -- Wall Street readied for a potential Lehman Brothers Holdings Inc. bankruptcy after Bank of America Corp. and Barclays Plc pulled out of talks to buy it and the government indicated it wouldn't provide funds to prevent a collapse.

Banks and brokers today held a session for netting derivatives transactions with Lehman, or canceling trades that offset each other, in case the New York-based firm files for bankruptcy before midnight.

``The purpose of this session is to reduce risk associated with a potential Lehman'' bankruptcy, the International Swaps and Derivatives Association said in a statement today. The ISDA includes 218 banks, brokerages, insurance companies and other financial institutions from the U.S. and abroad.

The step indicates Wall Street lacks confidence that three days of talks to find a buyer for Lehman, held at the Federal Reserve Bank of New York, will be successful. Treasury Secretary Henry Paulson, who has led the talks with New York Fed President Timothy Geithner, was adamant two days ago against using taxpayer funds to help a purchaser take Lehman over.

U.S. regulators are betting that the financial system will be able to withstand the failure of a large institution without severe disruptions to an already weak economy. http://www.bloomberg.com/apps/news?p...efer=worldwide

[Kolovorotkes]

well Lehmann out
http://news.bbc.co.uk/1/hi/business/7615712.stm
Preparations are being made for US investment bank Lehman Brothers to file for bankruptcy protection.

The firm was pushed to the brink on Sunday after UK bank Barclays pulled out of talks to buy most of Lehman.

If no new financing is found before Wall Street opens on Monday, Lehman will have to seek so-called Chapter 11 bankruptcy protection.

This could result in a severe shock to the global financial system, as banks unwind their complex deals with Lehman.

It could take weeks or even months to complete and put banks around the world in a state of extreme uncertainty.



Merril in by BoA

http://www.portfolio.com/views/blogs...ddComment=true

http://online.wsj.com/article/SB1221...ecial_coverage


Bank of America and Merrill Lynch & Co. Inc. are in merger discussions, according to people familiar with the matter.

Details of the terms under discussion weren't immediately clear but Merrill's board was reportedly meeting to approve an offer at $29 a share, which would value the firm above $40 billion.

Merrill's stock came under pressure last week as concerns about Lehman Brothers Holdings Inc. fanned worries about Merrill's health. Merrill's shares dropped 36% in the week, cutting $15 billion off of its market value. As of Friday, the firm was worth $26 billion.

The talks come amid a Wall Street scramble to sort out a potential liquidation of Lehman Bros. Bank of America had considered buying Lehman, but when those talks failed to result in a deal, BofA turned its attention to Merrill, which is considered a better fit for the bank.

Much remains uncertain and conditions were fluid. A deal could be announced this evening.

will be an interesting Monday

[Duseshoug]

Originally posted by Colon™
The number comes from Preqin Hmmm...

[Vkowefek]

The headline from the WSJ online...

Crisis on Wall Street as Lehman Totters,
Merrill Seeks Buyer, AIG Hunts for Cash
U.S. Opts to Avoid Lehman Rescue,
Stirring a Momentous Weekend for American Finance;
Traders Brace for a Chaotic Monday