The fourth largest U.S. investment bank, Lehman Brothers Holdings Inc., prepared to file for bankruptcy Sunday after Barclays PLC and Bank of America Corp. (BOA) pulled out from talks to buy the firm.

The exterior of the world headquarters for Lehman Brothers can be seen in New York, Sep.14, 2008. [Xinhua]

Barclays, the U.K.'s third biggest bank, and the BOA withdrew as they could not get guarantees from the government or other Wall Street firms to protect against potential losses on Lehman's assets.

According to a Bloomberg report, Lehman and its lawyers were getting ready to file the documents for bankruptcy protection Sunday night. The Wall Street now prepares for Lehman's possible liquidation.

New York-based Lehman, the biggest U.S. underwriter of mortgage securities, has lost 94 percent of its market value this year after record losses from investments tied to mortgages.

An employee walks out of the headquarter for Lehman Brothers in New york with her belongings on Sep. 14, 2008. [Xinhua]

The fall of Lehman shook the Wall Street and spurred a chain effect.

Hours after its withdrawal from Lehman, the BOA was reportedly to have reached a deal to acquire Merrill Lynch & Co. for 29 U.S. dollars a share Sunday evening. Shares of the third-biggest U.S. securities firm tumbled more than 35 percent last week and closed at 17.05 dollars a share, which means the BOA bid would total about 44 billion dollars.

According to a CNBC report, Merrill Lynch was forced to sell itself by regulators as its smaller rival Lehman neared bankruptcy.

American International Group (AIG), the largest U.S. insurer, is another big financial giant affected by the Lehman. The AIG is expected to announce a restructuring plan including assets sales Monday morning to boost investor confidence.

The Wall Street Journal said the AIG has refused private equity infusion and turned to the Federal Reserve for help. It is not clear what the central bank would do.

(Xinhua News Agency September 15, 2008)