The company also will spin off its commercial real estate holdings to shareholders and cut its stake in BHP Billiton, the world's leading miner, to below 3 percent.
The new real estate company will be called Real Estate Investments Global.
CNBC's Mary Thompson discusses the Lehman conference call in video at left.
A host of other banks, including Goldman Sachs and Merrill Lynch, pushed lower on fears that the credit crunch was far from over.
"We're coming in with fear of a systemic risk again. It's the one fear that trumps all the others," Bernard McSherry, senior vice president of strategic initiatives at Cuttone & Co., said on CNBC. "You can worry about inflation, you can worry about geopolitical concerns, but systemic risk is the one that really undercuts everything."
Stocks held gains on the strength in techs, with Research In Motion surging after announcing it is launching a flip version of its popular BlackBerry Pearl smartphone, a move that reasserts its push into the retail consumer market.
ImClone Rejects Offer; FedEx Gains
In other corporate news, ImClone Systems chairman Carl Icahn said the company was rejecting a buyout from Bristol-Myers Squibb, saying the $60 per share offer was inadequate. ImClone said it has received a $70 per share offer from another large pharmaceutical firm.
In the oil market, after hours of wrangling, OPEC on Wednesday agreed to revise its output targets and said the move would effectively cut supplies by half a million barrels per day (bpd). Still, US light, sweet crude prices slipped again, following data that found oil and gasoline stocks tumbled after Hurricane Gustav hampered production. The numbers were generally discounted due to the storm disruptions, though, continuing the bearish trend for energy prices.
"Whenever these storms happen, everything gets revised and the numbers are messed for a couple weeks," Tom Bentz, analyst at BNP Paribas Commodity Futures in New York, told Reuters. "Trying to make sense of the numbers is difficult. But it doesn't seem like the market is paying too much attention to fundamentals anyway. It's more concerned with the economic situation and that seems to be driving it."
In other corporate news, package delivery company FedEx said on Tuesday after the bell that its fiscal first-quarter earnings will be better than originally forecast, as fuel prices continue to fall off their recent highs.
General Motors and ExxonMobil led Dow gainers, while Boeing was lowest on the bluechip index. Insurer American International Group led the S&P higher, while several banks, including Morgan Stanley, were among the big losers on the broader index.
In other economic news, mortgage applications surged 15 percentafter the Fannie Mae-Freddie Mac bailout sent interest rates for home loans plunging to 6.06 percent. The Dow Jones Mortgage Finance index was up 3.6 percent in early trading.
Market breadth was positive, with gainers outnumbering losers about 1.7 to 1 through the morning trading.