Lehman Brothers was the target of dueling rumors Thursday as The Wall Street Journal reported the firm was shopping itself to potential suitors, including Bank of America Corp., while The Washington Post said that the Treasury Department and the Federal Reserve Board are engineering a sale to a consortium of private firms.

Lehman's shares dropped 42% Thursday, creating new doubts about its ability to trade with other Wall Street firms while keeping its best talent, the Journal reported.

Potential buyers remain wary about plugging holes in Lehman's balance sheet and are increasingly looking to the federal government to help backstop future losses.

B of A, which is holding preliminary discussions about a transaction, may make a Lehman deal only if it is encouraged by the federal government, the Journal said, since it has its hands full digesting Countrywide Financial Corp.

Lehman would not discuss the matter. B of A told American Banker on Thursday that it does not comment on speculation.

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