U.S. Stock Futures Tumble on Lehman Bankruptcy Speculation (Alan Wan)

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Sept. 15 (Bloomberg) -- U.S. stock-index futures tumbled on concern a potential Lehman Brothers Holdings Inc. bankruptcy will add to banks' $514 billion of subprime-related losses.

Federal Reserve and U.S. Treasury officials met in an emergency session as Barclays PLC abandoned talks to acquire Lehman, the fourth-largest U.S. securities firm until last week. Bank of America Corp. also ended takeover discussions, according to a person with knowledge of the matter.

{xtypo_quote_left} "I could see Lehman's shares fall into the Fannie Mae and Freddie Mac range," said Dickson. Fannie Mae and Freddie Mac dropped below 75 cents a share after the government announced plans to put the two largest mortgage finance companies under conservatorship. {/xtypo_quote_left}

Standard & Poor's 500 Index futures expiring in December retreated 38.90, or 3.1 percent, to 1,219.60 at 6:07 p.m. in New York. The benchmark index for U.S. equities declined 15 percent this year, led by a 28 percent plunge in financial companies.

"The collapse of this deal casts a dark cloud over Wall Street," said Frederic Dickson, who helps oversee $25 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. "It also sends a message that the government is getting out of the bailout business and makes financial institutions like AIG and WaMu look even more vulnerable."