Two Hours Before Midnight: The Crisis Continues

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$$$ CNBC's special Lehman program will stay on the air until at least 11.
$$$ DealBook says AIG is seeking a $40 billion bridge loan from the Federal Reserve. Why the bridge loan? What happened to that gigantic balance sheet we keep hearing about. According to DealBook AIG "faces a potential downgrade from credit ratings agencies that could spell its doom, a person briefed on the matter said Sunday night." AIG apparently loomed large in this weekends discussions.
$$$Here's the Fed statement on the broader collateral they'll take now in the emergency facilities.
$$$ We continue to hear from Lehman employees who are stunned at the news that their firm is heading toward bankruptcy and liquidation. Many are in denial, believing that a last minute rescue could still be mounted. Others say they have been told by their bosses to clear out their desks. Rumors are rife about the lack of severance due to bankruptcy and questions about benefits such as health care.
$$$ A parting Lehman executive pens a letter to his battered colleagues.

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We're told that the attempt to net out Lehman derivatives trade was a mess. "No one trusts anyone and no one will swap," one trader told us.

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The plan among banks to create some kind of private market discount window is moving forward, and the emergency funding pool is growing. The latest AP reports that the pool could be as large as $100 billion.

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