Potential Lehman (LEH) buyer Barclays has played a predictable (and final) card in the Lehman drama, storming out of the talks because Hank Paulson is refusing to put taxpayer money to work to make the deal happen. Barclays is probably ready to walk, but it's also probably hoping that this move will force Paulson to cave. Here's hoping he doesn't.
Paulson should set a time limit for all Lehman offers--say, 3PM--and if Barclays doesn't come back before then, he should force Lehman to declare bankruptcy. Doing so will wipe out Lehman shareholders, but it will prevent the company's crap assets from hitting the market all at once, thus burying the rest of Wall Street.
The good bank / bad bank strategy, which would force the rest of Wall Street to throw money down the Lehman rat hole, never made sense. If Barclays isn't willing to buy Lehman outright and accept the balance sheet risk, bankruptcy is a fine alternative.
See Also: LEHMAN DEATH THROES, Complete
