The last few quarters have proven to be a terrible time for financial institutions in the United States. The credit crisis has gotten far worse than just about any of the major firms CEO's thought was possible, and because of that, many of these companies are running out of capital. It has been a scramble to raise new capital through any avenue possible, but some firms are finding it next to impossible to raise enough capital.

Lehman Brothers is latest in the line of financial institutions that is knocking on the door of financial insolvency. A few months ago it was Bear Stearns that became the first major bank failure, being taken over by the government and JP Morgan Chase. Since that time Lehman Brothers has been questioned many times over as to its capital positions due to worries that it could be next. The firm has stated many times that it will be able to make it, but it appears that things have gotten far worse in the last few weeks. Today Lehman Brothers announced a stunning loss of $3.9 billion in the third quarter on write downs of $5.6 billion. Wall Street analysts had been expected write downs of about $2.2 billion. This is the biggest loss Lehman Brothers has ever announced in their 158 year history.

What is going on at Lehman Brothers? The company has had a lot of exposure to a commercial real estate market that is nothing short of pitiful, and it is paying a huge price for that. Lehman Brothers also has a significant issue with exactly how it is keeping track of its assets. Many on Wall Street believe the company is refusing to show the true lack of value that its assets truly hold right now. Lehman Brothers is perceived to be behind the curve in writing down what is called level three assets. What exactly are level three assets? Level three assets are holdings that are trading so infrequently that they are deemed to have no reliable price, so there valuations come down to management's best guess. Clearly in these times when the credit market is in the shape it is in now, no one has a good guess as to what these assets are worth, but they definitely aren't worth much. This means that Lehman Brothers is left with a whole lot of assets that they thought would be very valuable and could hold some value in the future, but have very little if any value right now.

What is Lehman's plan to survive?

Quite honestly, this is the problem, many on the street believe Lehman doesn't have a whole lot of a plan. Today the company announced that it will spin off $32.6 billion of its commercial real estate portfolio as well as sell 55% of its investment management unit, Neuberger Berman. The real-estate spinoff is expected to occur in early 2009. Neuberger Berman, a very respected investment management unit, will be auctioned off but there is no news on who the prospective bidders may be.

At this point it seems as if Lehman Brothers is grasping for straws to stay in the game. Almost everyone on the street will tell you that Neuberger Berman is one of Lehman's most respected and profitable assets, so the fact that it is getting rid of 55% of the company speaks to the desperate measures the company has gotten itself into.

Can it survive on its own?

What today's actions did was buy Lehman a little bit of time, but its unclear even how much time it truly bought them. The fact that Lehman Brothers is unable to get any kind of foreign investment into the company speaks volumes to the fact that others clearly don't value Lehman nearly as highly as Dick Fuld, CEO of Lehman Brothers, and the rest of the board do.

It is extremely likely that Dick Fuld and Lehman will be working the phones and trying to get a major deal in the coming weeks. Who could be possible suitors? There seem to be few financial companies who have the kind of balance sheet to take on the risk that Lehman would bring right now. Goldman Sachs is one of the few that might, but it hasn't shown interest up to this point. JP Morgan Chase and Jamie Dimon already took over Bear Stearns so they shouldn't be interested. The Federal government has plenty of liabilities from Fannie Mae and Freddie Mac to deal with, so Lehman probably can't expect a full bailout from the government either.

Lehman Brothers days as an independent company are likely numbered. The main question is, who will step up to the plate and buy and at what price?