The New York Fed called an emergency meeting of Wall Street heavyweights last night to try to avert a collapse of Lehman Brothers, the Wall Street Journal reports. Top execs of all the big financial firms were urged by NY Fed Chief Timothy Geithner to work together to save the bank, the New York Times reports, arguing that if they failed, other banks would be in jeopardy. Treasury Secretary Henry Paulson and SEC Chairman Christopher Cox were also in attendance.
The meeting was reminiscent of one called 10 years ago to rally banks to prevent the collapse of hedge fund Long-Term Capital Management. But this time, most of the potential saviors are themselves wounded by the credit crunch. Would-be buyers, including Bank of America, want a Bear Stearns-like package in which the government absorbs some of Lehman's losses. Insiders say Paulson made it plain at the meeting that he is opposed to using taxpayer money to bail out Lehman.