Still No Resolution On Lehman

As of 11:31 PM ET Saturday evening, WSJ is reporting that no resolution has been reached in the Lehman crisis. The problem appears to be in understanding just what risks exist in Lehman and, thus, why any institution would step up to the plate, not knowing the downside.

There are buyers for the 'good' assets of Lehman, but no takers for the 'bad', i.e. unknown risk, assets. With the clock ticking to Asian markets opening Sunday evening, Paulson and Bernanke may be forced to step in.

Possible scenarios:

A complete "orderly" liquidation of Lehman.

OR

Good assets are bought by a bank, possibly Bank of America. Bad Assets are put in a newly formed corporation, owned by several banks, where the new corporation issues new debt to finance the deal that the Fed will immediately accept at the discount window. Lehman common shareholders are wiped out. Lehman debt holders are forced to take a haircut.

Merrill Lynch Chairman and CEO John Thain leaving the meeting at the New York Federal Reserve.

-Robert Wenzel