Lehman Brothers went into the weekend of September 13-14, 2008, amid widespread uncertainty and fears about a collapse that could have wide global repercussions.
Lehman shares had slid 13.5 percent on Friday, culminating a drop of 90 percent for the once-venerable Wall Street investment firm as panic gripped financial markets.
"There seems to be no end to the shoes that keep dropping around the financial services companies -- obviously we are dealing with an octopus -- and we just aren't sure who is next or whether the government will deem them worthy of public support," said Kevin Giddis at Morgan Keegan as the weekend approached.
Yet there was still hope of finding a savior for Lehman in marathon weekend talks before the calamity and a frantic week that rocked the global financial system and led to what has been dubbed the "Great Recession."
The events around September 15, 2008, remain hotly debated a year later, but the failure of the 158-year-old firm shook confidence in the system, creating a panic from which the global economy has yet to recover.
As the weekend approached, reports said Bank of America was in line as a buyer, but debate was fierce on whether the US government should "backstop" any deal with credit guarantees -- a decision widely criticized in the takeover of Bear Stearns earlier in 2008.
White House spokesman Tony Fratto said ahead of the weekend that the US Treasury was "closely monitoring the markets and they stay in contact with market participants."
The Financial Times reported that in addition to Bank of America, private equity firm JC Flowers & Co and China Investment Co., the Chinese sovereign wealth fund, were considering a possible joint bid for Lehman. British-based Barclays was also interested, the FT said.
A series of closed-door weekend meetings with Federal Reserve and Treasury leaders produced no buyer for Lehman. Bank of America then decided to pursue a deal for Merrill Lynch, another Wall Street giant reeling from the collapse of the US housing market bubble.
On Sunday, the last-ditch effort to find a buyer for Lehman appeared near collapse as Barclays pulled out of talks on concerns it would have to guarantee the US firm's trading commitments.
"Clearly things are changing quickly and are very fluid," David Kotok, chief investment officer at Cumberland Investments, said as talks appeared to break down.
"The Fed and the Treasury are trying to get a deal done before the markets open on Monday."
The talks finally collapsed around 1:15 am on Monday and the bankruptcy filing came in New York hours later, catching by surprise market participants who had expected a last-minute rescue.
Later Monday morning, angry and saddened employees streamed into Lehman Brothers for what they feared would be their last day at work at the once seemingly impregnable bank.
Today, debate still rages on whether Lehman could have been saved and the global crisis contained.
"No one was willing to buy Lehman because its problems were too widespread," says Cary Leahey at Decision Economics.
He noted that many people forget that the Fed "did not have the regulatory authority to unwind Lehman Brothers the way they could a commercial bank."
What followed was a week of stomach-churning turbulence that pushed insurance titan AIG to the brink of collapse and prompted a run on the trillion-dollar system of money market deposits, forcing the Fed and Treasury to put out multiple fires at once.
"Bernanke will go to his grave claiming he did everything in his power but couldn't save Lehman," said Joel Naroff of Naroff Economic Advisors.
Diane Swonk, chief economist at Mesirow Financial, said a rescue of Lehman was effectively doomed by the fallout from the March deal to save Bear Stearns, described by some as a bailout even though its shareholders got nearly nothing.
"There was no political will after Bear Stearns to bail out another investment bank," she said.