No Bailout, But....
The Fed and Treasury are not going to bailout Lehman with taxpayer money, but they are doing everything else to try to save it, or at least get a buyer for it that will minimize the market impact. New York Fed President, Timothy F. Geithner, along with Hank Paulson and Christopher Cox (head of the SEC) convened a meeting this afternoon with Wall Street's largest banks, including Goldman Sachs, JP Morgan, Morgan Stanley, Citigroup and Merrill Lynch, where:

Mr. Geithner told the participants that an industry solution was needed, no matter what, and that it was not about any individual bank, according to two people briefed on the meeting but who did not attend. They said he told them that if the industry failed to solve the problem their individual banks might be next.

The Fed told the bankers to rescue Lehman and develop a plan to end the credit crisis. A link here, here, and here describe the meetings in further detail. All three articles describe the talks as similar to ones ten years ago to save the hedge fund Long Term Capital Managment. I think this is significantly different (and not in a good way), and the articles touch on this, in that Lehman is in the same business as the other bankers, not a credit client like LTCM. The bankers then had a common interest, now many may have a self interest or survival interest that might supersede the common interest.

The credit crisis is entering a key phase and the next few weeks hold the key. If Lehman and AIG go away I am not sure what it means for Wall Street in the short and long term, but it is not good.