NEW YORK - The Federal Reserve Bank of New York held an emergency meeting Friday night with top Wall Street executives to discuss the future of venerable firm Lehman Brothers Holdings Inc. and the parlous state of U.S. financial markets.
The meeting, which began at 6 p.m., was called by the New York Fed to try to find a solution to problems plaguing Lehman. The group, which consisted of the heads of most major financial institutions, is expected to meet throughout the weekend to see if it can agree on some way to rescue the ailing firm, according to a person familiar with the matter.
Treasury Secretary Henry Paulson has made it clear to participants that no government bailout should be expected, this person said. Representatives of the banks plan to continue meeting to try and forestall a collapse of Lehman, which could hurt their firms and Wall Street in general.
In attendance were government officials, including New York Fed President Timothy Geithner, Paulson and Securities and Exchange Commission Chairman Christopher Cox. Wall Street executives included Morgan Stanley Chief Executive John Mack, Merrill Lynch Chief Executive John Thain, J.P. Morgan Chase CEO Jamie Dimon, Goldman Sachs Group CEO Lloyd Blankfein, Citigroup Inc. head Vikram Pandit and representatives from the Royal Bank of Scotland Group and Bank of New York Mellon Corp.
The meeting appeared similar to one a decade ago when the New York Fed pulled together top Wall Street executives to prevent the collapse of hedge fund Long-Term Capital Management. One big issue: Most firms at the meeting have themselves been hit with big losses and may not have the excess capital to step in.
"Senior representatives of major financial institutions met at the Federal Reserve Bank of New York Friday evening to discuss recent market conditions," a spokesman for the New York Fed said. The SEC issued a similar statement.
If the meeting helps engineer a rescue for Lehman that doesn't involve government funding, it would represent a new approach for the Bush administration and Paulson.
As of late Friday, Paulson appeared unwilling to support a government-led bailout of Lehman, people familiar with the situation say.
