Lehman talks sag, Merrill has buyer

NEW YORK, Sept. 14 (UPI) -- Talks aimed at rescuing Lehman Brothers Inc. investment bank were fruitless but Merrill Lynch found a buyer in Bank of America Sunday, The New York Times said.

Bank of America will acquire Merrill Lynch for about $50 billion in a deal the newspaper said was intended to avert a worsening financial crisis at Merrill Lynch. That works out to about $29 a share -- more than $12 above Merrill Lynch's closing price Friday.

Federal Reserve officials and leaders of major U.S. financial institutions held emergency meetings Sunday to try to find a way to rescue Lehman Brothers. The talks took on urgency since government officials wanted a deal to rescue the company before the financial markets open Monday, the newspaper said.

However, the talks -- held at the Federal Reserve Bank of New York and led by Timothy Geithner, president of the New York Fed, and U.S. Treasury Secretary Henry Paulson Jr. -- failed to find a resolution Sunday and the Times said Lehman Brothers appearing to be heading for liquidation.

A leading proposal would have divided Lehman into two entities, a "good bank" and a "bad bank," the newspaper said. Barclays of Britain was said to be considering buying the parts of Lehman that have been performing well -- but Barclays stepped back, concluding it could not work a deal without help from other banks or the federal government, the newspaper said.

Paulson has said he is determined not to use government money to bail out Lehman Brothers and is instead calling on other investment banks to come to Lehman's rescue, The Daily Telegraph reported.