By the second week of September, investors had all but given up on Lehman Brothers Holings Inc. Creditors wanted the 158-year-old investment bank to put up additional collateral to cover its bets in the derivatives market. Customers were scrambling to close accounts. Traders couldn’t move the firm’s commercial paper, or settle trades. In its most visible sign of distress, Lehman’s share price tumbled in those last days like a sick pigeon from the sky.
These grim facts of life weren’t lost on four senior partners from Weil, Gotshal & Manges. On Sunday, Sept. 14, they sat in a taxi, stuck in traffic in lower Manhattan. They were headed to the Federal Reserve Bank of New York. The Weil lawyers knew that without a buyer or a government bailout, a Lehman bankruptcy was possible-hell, even likely. After all, the firm had spent the previous few days planning for that very possibility.
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