LEH Rearranges The Furniture

I would love to see LEH sell off their mortgage assets to a new company. It would cause a giant mark-to-market, if the investors were truly arms-length:

Bloomberg.com: Worldwide: "Lehman Brothers Holdings Inc. may set up a company funded by outside investors to buy some of its mortgage assets, aiming to dispel concern the firm faces crippling losses, people familiar with the discussions said.

Investors in the new venture would also manage the holdings, which are linked to commercial real estate, the people said, declining to be identified because the proposal hasn't been made public and no decision has been made about how to proceed. The New York-based firm had about $40 billion in commercial-mortgage assets as of May."

My read is that LEH is just about out of options and time. This smells of desperation to me.