With a Lehman bankruptcy starting to look inevitable, the next domino in the line-up could potentially be Merrill Lynch. The Wall Street Journal says Bank of America is taking pre-emptive action and is in merger talks with Merrill, which it sees as a better fit than Lehman anyway.
Wall Street prepares for Lehman to go under - emergency swaps session. (naked capitalism)
PWC lined up to manage Lehman's administration in the UK. (BBC)
"In principle, Lehman should be allowed to go. But if that happens, the next day there will be a run on Merrill Lynch, Goldman Sachs. Let's not pretend that's not going to happen. Systemic risk is worse now than it was with Bear Stearns." (Sunday Times)
A bankruptcy filing would put the company in the hands of a court appointed liquidator, which would take years to sell off everything. This would wipe out Lehman's equity and hit its debt, but the liquidation sale would happen in an "orderly" fashion. It might take so long, in fact, that some of the assets might start appreciating in value before the end of the process. (Clusterstock)
Barclays got cold feet at the sight of Lehman's toxic underbelly. (CNBC)
So did Bank of America. (Reuters)