Fed holds emergency meeting on Lehman

WASHINGTON - The Federal Reserve Bank of New York held an emergency meeting last night with top Washington policymakers and major financial institutions to discuss the future of Lehman Bros.

The meeting, which was attended by Treasury Secretary Henry Paulson, was held at the offices of New York Federal Reserve Bank president Timothy Geithner. The meeting was confirmed by Fed spokeswoman Michelle Smith.

Smith refused to disclose what financial institutions participated in the meeting or whether the group had reached any conclusion over how to resolve the crisis facing Lehman Bros.

She said that in addition to Paulson and Geithner, Christopher Cox, the chairman of the Securities and Exchange Commission, was in attendance for the discussions.

The private-sector participants were described by Smith only as "senior representatives of major financial institutions."

However, the Wall Street Journal reported on its Web site that this group included Morgan Stanley chief executive John Mack and Merrill Lynch chief executive John Thain among others.

Earlier in the day, a person familiar with Paulson's thinking said that the treasury secretary was opposed to the use of any government money to bail Lehman Bros. out of its financial difficulties.

Lehman Bros., the nation's No. 4 investment bank, was racing to find a buyer two days after it laid out a restructuring plan it said would raise badly needed money it lost on bad bets in real estate holdings.

Lehman's losses soared to almost $7 billion in the last two quarters.

Lehman shares fell 57 cents, or 13.5 percent, to close at $3.65. The stock is down nearly 95 percent from its 52-week high of $67.73 one year ago.