Lehman stock drops further as sale talk intensifies

— -- Confidence has waned that Lehman will emerge from the financial crisis as an independent franchise, and the No. 4 U.S. investment bank is scouring Wall Street for a financial lifeline. Executives worked feverishly in the past two days to find someone willing to buy all or part of the company, bankers and industry executives close to the situation said.

Lehman shares dropped 57 cents, or 13.5%, to $3.65. The stock is down dramatically from its 52-week high of $67.73 one year ago.

Financial markets have been aware of Lehman's troubles for a long time and have had time to prepare. And the Federal Reserve is now allowing investment banks to borrow directly from the Fed just as commercial banks can do. It opened the borrowing spigot for investment banks after the near collapse of Bear Stearns in March.

Bank of America, Japan's Nomura Securities, France's BNP Paribas, Deutsche Bank and Britain's Barclay's have been mentioned as potential buyers. Goldman Sachs, also mentioned, is not interested, according to an industry official who ask not to be named.

Lehman is in close contact with both the Treasury Department and Federal Reserve about how to proceed.

Government officials, who asked for anonymity because of the sensitivity of the ongoing discussions, said a number of options were being explored and no decisions had been reached on how any deal would be structured.

Any resolution of the Lehman troubles is not expected to involve the use of government money, which would set it apart from the billions of dollars that the government put at risk to facilitate the sale of Bear Stearns in March and to rescue mortgage giants Fannie Mae and Freddie Mac this week.

Treasury Secretary Henry Paulson is against any use of government money in whatever deal comes together for Lehman, a person close to his thinking told the Associated Press on Friday.