U.S. helping Lehman without funds offered

WASHINGTON, Sept. 12 (UPI) -- U.S. regulators are pitching in to carve out a scenario for Lehman Brothers Holdings that would have the least damage to financial markets, sources said.

Officials from the top ranks of the U.S. Treasury, the U.S. Federal Reserve Bank and the Securities and Exchange Commission are involved, calling Lehman Brothers frequently to secure a deal that wouldn't involve public funds, The Washington Post reported Friday.

Reportedly, Lehman Chief Executive Officer Richard Fuld and Securities and Exchange Commission Chairman Christopher Cox have been speaking frequently.

Lehman Brothers has lost huge sums on investments in real estate and mortgage-backed securities. It reported a $3.9 billion third-quarter loss Wednesday.

However, different from the collapse of investment bank Bear Stearns in March, Lehman Brothers has more cash on hand -- $42 billion, compared with $17 billion for Bear Stearns – and there has been no comparable run on the bank.

There are worries that regulators are overextended, having bailed out Bear Stearns in March and seized control Sunday of the Federal Loan Mortgage Corp. and the Federal National Mortgage Association, the Post said.

"I hope they will not use all their powers or all their rabbits in doing this," said U.S. Sen. Richard Shelby, R-Ala.