Lehman Prepare Bankruptcy as Buyers Withdraw

Lehman Brothers Holdings Inc. prepared to file for bankruptcy after Barclays Plc and Bank of America Corp. abandoned talks to buy the U.S. securities firm .

Barclays contending it couldn’t obtain guarantees from the government or other Wall Street firms to protect against potential losses on Lehman’s assets. Bank of America withdrew about three hours later. Banks and brokers began consolidating trades in which Lehman is involved to minimize the impact of a possible bankruptcy filing tonight.

Meanwhile Merrill Lynch & Co. is in merger talks with Bank of America Corp. after shares of the third- biggest U.S. securities firm fell by more than 35 percent last week and smaller rival Lehman Brothers Holdings Inc. neared bankruptcy, people with knowledge of the negotiations said.