http://www.iht.com/articles/2008/09/14/business/barclays.phpsnip>
According to executives briefed on the negotiations, Barclays could not get a commitment from the U.S. government that it would guarantee Lehman's counterparty settlements - a figure that could well exceed $50 billion. According to securities law here, Barclays would have had to get approval from shareholders to offer such a guarantee itself.
A deal can always be revived, but the U.S. Treasury's hard line in not providing financial support for Lehman is an indication that the administration of President George W. Bush is adamant about leaving the future of Lehman to the markets.
That Lehman Brothers, a bank founded in 1850 and carrying one of the best names in finance, may fail extends the death spiral of the once mighty Wall Street investment bank. For Diamond the frustration of a deal not done is surely acute, but it may well be tempered by a feeling of vindication that what he has been saying since 1996 has been borne out.
Bear Stearns is no more, Lehman Brothers faces the prospect of liquidation and U.S. government officials and investors now worry that Merrill Lynch - after a 12 percent slide in its shares Friday - could be next.
That Diamond came so close to buying Lehman, adds a fresh twist to what even investment bankers themselves are saying - that the days of swagger and success of the classic Wall Street investment bank are coming to an end. In a new, more regulated financial environment that will continue to see vast sums of money transferred from Wall Street to distant locales like Dubai, Riyadh, Shanghai and Singapore, the traditional strengths of an investment bank - taking risk and raising money - have diminished.
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