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The U.S. government, which bailed out Fannie Mae and Freddie Mac a week ago and orchestrated the sale of Bear Stearns Cos. to J.P. Morgan Chase & Co. in March, played much tougher with Lehman. It refused to provide a financial backstop to potential buyers.
[A man walks out of the Lehman Brothers building carrying a box of his belongings, in New York, September 14, 2008. Talks faltered when Britain]
A man walks out of the Lehman Brothers building carrying a box of his belongings, in New York, Sept. 14.

Without such support, Barclays PLC and Bank of America, the two most interested buyers, walked away. On Sunday night, Bank of America was close to striking a deal to buy Merrill Lynch for about $44 billion, or $29 a share. Lehman was working on a possible bankruptcy filing that would allow most of its subsidiaries to continue operating as the firm is wound down.


they played chicken against the Fed and lost
Instead of doing the predictable bailout, the Fed let Lehman fail, and instead will liquify the survivors.

the message: deleverage and shore up your balance sheet, or else we'll help your competitors pick apart your rubble after you collapse.
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