Lehman's Debt Debacle

One question swirling over the weekend-long effort to rescue Lehman Brothers: What's to become of its $128 billion in long-term debt?

Ratings agencies have already threatened to downgrade Lehman's (nyse: LEH - news - people ) debt if it can't find a buyer or come up with a plan to raise capital, beyond the plan it announced last week as the crisis of confidence in the firm erupted.

Hopes for a complete sale of Lehman faded Sunday as the negotiations among top Wall Street bankers and regulators gathered at the Federal Reserve Bank of New York pressed on. The current view favors the breakup of Lehman.