by Calculated Risk on 9/13/2008 05:16:00 PM

The Financial Times has more on the emergency discussions in New York: Wall Street firms could buy Lehman ‘bad bank’

Wall Street firms would buy the $30bn-plus of property assets held in Lehman Brothers’ “bad bank” in order to facilitate a rescue takeover for the embattled financial group, under one of the options being discussed by industry executives and regulators.

Financial chiefs have so far expressed reluctance to back the plan but remained locked in discussions with Treasury and Federal Reserve officials in New York Saturday in an effort to solve the crisis at Lehman before the markets open on Monday ...

This apparently is just one option being discussed. There is much more in the article ...

Update: From the NY Times: Bankers and U.S. Map Out Options in Lehman Crisis

The group was working on two main contingency plans in case Lehman is unable to strike a deal to sell itself to one of several suitors — Bank of America or two British firms, Barclays and HSBC. Under one possibility being discussed, major financial firms would jointly inject new capital into Lehman, allowing it to spin off its portfolio of troubled securities into a separate company.

Under another option, Lehman would start an orderly liquidation of its assets on Monday. Its major competitors would agree to keep doing business and trading with Lehman as it unwound its business and portfolio.