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Lehman Brothers will file for bankruptcy protection tonight or tomorrow morning according to the New York Times.  This marks the uncerimonious end of the 158 year-old Wall Street institution.  A much different end result than the government-brokered Bear Stearns bailout to be sure.  Because of the bankruptcy law around financial services firms the company must liquidate, and cannot reorganize and continue operating.

From the New York Times:

Lehman will seek to place its parent company, Lehman Brothers Holdings, into bankruptcy protection, while its subsidiaries will remain solvent while the firm liquidates its holdings, these people said. A consortium of banks will provide a financial backstop to help provide an orderly winding down of the 158-year-old investment bank. And the Federal Reserve has agreed to accept lower-quality assets in return for loans from the government.

But Lehman’s filing is unlikely to resemble those of other companies that seek bankruptcy protection. Because of the harsher treatment that federal bankruptcy law applies to financial-services firm, Lehman cannot hope to reorganize and survive as a going concern. It will instead liquidate its holdings.

It was not clear whether the government would appoint a trustee to supervise Lehman’s liquidation, or how big the financial backstop would be.

Lehman’s broker-deal subsidiaries would not be a part of the bankruptcy filing. Those entities must file under Chapter 7 rules, which are the procedures for liquidation, under the assumption that it is the best way to protect customers. The Securities Investor Protection Corporation would handle the liquidation of such brokerages, and bankruptcy lawyers say that customers are likely to receive their holdings back.

Lehman just wasn’t able to get out of its own way.  After making huge bets on subprime and Alt-A mortgages with the purchase of BNC Mortgage and Aurora Services, they were unable to unwind their exposure before the bottom fell totally out.

You can read more about the Lehman bankruptcy here and here.

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Lehman to file for bankruptcy

Lehman Brothers, the ailing Wall Street I-bank, is cutting up to 1,500 jobs in the face of the ongoing credit crisis. Not surprising as Lehman made the biggest bets in subprime during the boom and has massive exposure to further losses on its loan portfolio.

From the Wall Street Journal (subscription req’d):

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An investment bank announcing layoffs in the current capital-market slump may not raise a lot of eyebrows.

But in the case of Lehman Brothers Holdings Inc. such news might carry a bit more weight. The company has been struggling to keep up with the losses it had to take in marking to market its mortgage assets, and is in talks …

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Lehman to cut 1,500 jobs

The mega Wall Street investment bank is poised to begin cutting up to 5% of the company’s 28,000-strong workforce next week, reported CNBC.  No word from the company confirming the report but it wouldn’t come as a surprise.  Lehman has taken aggressive head count-reducing steps over the past several quarters as it consolidated its mortgage divisions and more reductions to battle the effects of the credit crunch would be a reasonable capital-preserving strategy.

We’ll track this story as it develops.

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Lehman Brothers to cut up to 1,400 jobs