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 Brilliant reporting on the demise of Lehman Brothers from Bloomberg… here is a snip about the very end…

~~~~ ” … On Sept. 12, one team of Lehman executives was camped out at the Lexington Avenue offices of New York-based law firm Simpson Thacher & Bartlett LLP, showing the firm’s books to Barclays. Another group was at the Park Avenue office of Sullivan & Cromwell LLP doing the same for Bank of America. CEO Lewis agreed to the talks after Paulson urged him to consider a deal, a person with knowledge of the discussions said.

Two other Lehman executives — McDade and Alexander Kirk, global head of principal investing — were dispatched to the New York Fed on Liberty Street, where Geithner and Paulson had gathered a group of Wall Street leaders. There, Paulson reiterated that no taxpayer money would be used to save Lehman. He challenged the group to find a private solution to rescue the firm, saying it was in their own best interests.

Barclays Deal

One of the attendees, Merrill CEO John A. Thain, 53, took stock of his own company’s best interests and initiated merger talks with Bank of America. Lewis had concluded on Friday that he couldn’t do a deal with Lehman without government backing, which he thought would be forthcoming. After Paulson made it clear to Lewis that a government role wasn’t in the cards, the Bank of America CEO pulled his team out of the Lehman talks.

That left only Barclays, since Nomura told Lehman it was unable to move fast enough. Fuld, who rarely left his office that weekend — working the phones, fielding calls from deputies, talking to Barclays executives — thought he had a deal Saturday night. Barclays was willing to buy Lehman for about $5 a share if it could leave behind the most troublesome assets, the ones Lehman had proposed spinning off into a separate company as well as some others Barclays didn’t want.

Sunday morning brought a false dawn. Geithner and Paulson had talked a syndicate of banks into backstopping the creation of a new entity that would take over $55 billion to $60 billion of Lehman’s problem assets, according to people with knowledge of the negotiations.

No Lifeline

Everyone was basking in what seemed a done deal until word came at 11:30 a.m. in New York that the U.K.’s FSA, which regulates that country’s banks, refused to waive normal shareholder-approval requirements or to allow Barclays to guarantee Lehman’s debts until obtaining that approval. The reason, people familiar with the decision say, was that Barclays lacked sufficient capital to absorb Lehman.

At that point, the only way to save the deal would have been for U.S. regulators to make the temporary debt guarantee. They didn’t. Paulson, who told the New York Times he didn’t have the authority to rescue Lehman, didn’t answer questions about Sunday’s events submitted by Bloomberg. Nor did Geithner.

Fuld thought Paulson was in his corner, he told a person familiar with events, even as the Treasury secretary publicly resisted spending taxpayer money to help Lehman. Fuld was stunned, the person says, when Paulson didn’t throw him a lifeline at the end.

Failure’s Furies

It was McDade who called Fuld from the Fed meeting on Sunday afternoon, not Paulson. Far from helping Lehman, Paulson, Geithner and other officials, including SEC Chairman Christopher Cox, began pressing Lehman to declare bankruptcy. McDade told them that would have serious repercussions for other firms. Wall Street executives gathered at the Fed said a bankruptcy wouldn’t be the end of the world. Goldman Sachs and Morgan Stanley both had war rooms with charts detailing Lehman’s subsidiaries and their exposure to each one, and they thought their potential losses would be limited.

No one, not even Lehman, knew what furies the firm’s failure was about to unleash.

The end came at about 2 a.m. Sept. 15, when Fuld, out of running room, filed for bankruptcy. That day the Standard & Poor’s 500 Index had its biggest daily drop since the September 2001 terrorist attacks, and bank-lending rates soared. Paulson, who was poised to let AIG fail, quickly re-thought the wisdom of that decision and approved an $85 billion bailout. He and Bernanke also went to Congress to push for a $700 billion federal bailout to buy bad assets from troubled banks…. ” ~~~~