Massive Shifts on Wall St.Troubled Investment Bank To File for Bankruptcyhttp://www.washingtonpost.com/wp-dyn/content/article/2008/09/14/AR2008091400355_pf.htmlBy Heather Landy and Neil IrwinWashington Post Staff WritersMonday, September 15, 2008; A01NEW YORK, Sept. 15 -- Lehman Brothers announced early Monday morning that it will file for bankruptcy, becoming the largest financial firm to fail in the global credit crisis, after federal officials refused to help other companies buy the venerable investment bank by putting up taxpayer money as a guarantee.The failure of the nation\'s fourth-largest investment firm offers a profound test of the global financial system, and government and private officials had been bracing Sunday night for an upheaval in a range of financial markets that have never before experienced the bankruptcy of such a large player. To keep cash flowing normally through these markets, the Federal Reserve announced new lending procedures, while 10 major banks combined to create a new $70 billion fund.\n\nAfter a marathon series of negotiations over the weekend, Federal Reserve and the Treasury stepped aside to allow a wrenching transformation of Wall Street to proceed. After galloping to the rescue of other major financial institutions in recent months, the federal government drew the line with Lehman Brothers, ignoring pleas from would-be buyers of the company who insisted on receiving federal backing for its troubledassets.\n\nLeaders of the Federal Reserve and Treasury Department decided that Lehman was unlike the investment bank Bear Stearns, whose sudden collapse in March threatened the world financial system, or Fannie Mae and Freddie Mac, whose potential insolvency did the same.\n\nIn betting that Lehman couldbe allowed to fail without catastrophic consequences, New York Federal Reserve President Timothy F. Geithner, Fed Chairman Ben S. Bernanke, and Treasury Secretary Henry M. Paulson Jr. were making it clear that struggling financial firms cannot count on a bailout.\n\nThe decision not to intervene carries the risk that the ripples of Lehman\'s failure will prove impossible to contain. What worries regulators and Wall Street is a massive, multitrillion-dollar lattice of interlocking financial instruments known as derivatives. The most worrisome to bankers are \"credit default swaps,\" in essence a form of insurance against corporate failures. If the financial firms themselves fail, the value of the insurance they have written will be tested as never before. adventure, advice, Alan, analysis, announcements, Bank, Bankruptcy, Brothers, business, commentary, community, Crash, Dow, economics, events, Failure, federal, Files, finance, for, gotcha!, government, grassroots, Greenspan, Henry, Jones, Lehman, math, media, news, outreach, Paulson, public, service, tv, Wallstreet, wisdom