The Financial Crisis: This Day—One Year Ago, Sept. 10

Lehman Brothers moves closer to taking center stage in the crisis.

The firm reports a historic loss and says it will slash its annual dividend to 5 cents per share from 68 cents.

It doesn't end there, though. Charlie Gasparino reports that the company is also switching strategic gears.

This Day 1 Year Ago - A CNBC Special Report - See Complete Coverage
This Day 1 Year Ago - A CNBC Special Report - See Complete Coverage

Lehman executives maintain that the firm is in "advanced discussions with a number of potential partners" on a sale of 55 percent of a portion of its investment management division, including asset management unit Neuberger Berman and the private equity and wealth management businesses. Final bids are due Friday, and a sale might be announced in October, a person "familiar with the matter" tells Reuters.

But Gasparino says the "real story" has been buried in the company's news release — i.e., the phrase, "The firm remains committed to examining all strategic alternatives to maximize shareholder value."

Gasparino says that "smart people" understand that to mean Fuld is now ready to sell the whole firm, lock, stock and barrel.

He says that earlier, private equity firms had inquired about buying the whole works, but were directed instead to bid on parts of the asset management division, including Neuberger. But Gasparino opines that "there's been a change now," as "Lehman cant take risk anymore."

The brokerage continues to seek ways to restore investor confidence, but with no concrete plans in place to sell a majority stake in its asset management unit and spin off commercial real estate — the drum CEO Dick Fuld has been beating for days — all investors can see is its record $3.93 billion third-quarter loss. And no answers in sight.

The Crisis: 1 Year Later - A CNBC Special Report - See Complete Coverage
The Crisis: 1 Year Later - A CNBC Special Report - See Complete Coverage

State-run Korea Development Bank now confirms the end of talks over a possible investment in Lehman, citing "a disagreement over conditions of a transaction and considering domestic and foreign financial market conditions."

Moody's Investors Service warns that it may downgrade Lehman if the firm doesn't arrange "a strategic transaction with a stronger financial partner."

Lehman plans to spin off $25 billion to $30 billion in troubled commercial real estate assets into a new publicly traded company in the first quarter of 2009. The firm also says it is in talks to sell $4 billion of its UK residential mortgage portfolio to BlackRock , and expects a sale in the next few weeks. The company has slashed 1,500 jobs since May 31.

Will the deals go through? And if so, will they do the trick? Bill Fitzpatrick, analyst at Optique Capital Management, isn't too optimistic: "These are last ditch measures," he says. "They've tried to raise capital from sovereign wealth funds and others, and that didn't work. Now they're selling businesses, which destroys future earnings power."

What You Were Reading:

Not everyone is so spooked. Jim Chanos, president of Kynikos Associates and chairman of the Coalition of Private Investment Companies, tells CNBC, "We're probably as least short as we've ever been on financials. We were overweight on financials from 2005 on. ... Now, in our short funds, we're about 10-12 percent in financials -- probably as low as it's been in a while."

Chanos adds, "We're not short Lehman and haven't been."

Meantime, Warren Buffett's Berkshire Hathaway tells one of its units to stop insuring bank deposits above the amount guaranteed by the U.S. federal government, The Wall Street Journal reports.

The Dow, S&P and Nasdaq all end Wednesday slightly higher, though shares of many financials end the day lower.

One particularly brutalized stock is Washington Mutual, which drops more than 20 percent to $2.30, its lowest level in more than a decade. Trader Talk blogger Bob Pisani says that the turmoil at WaMu (destined to be taken over by JPMorgan Chase ) and giant insurer AIG are the real story now — with far more traders interested in those two firms than Lehman's fate.

In other economic news, mortgage applications surge 15 percent after the government bailout of Fannie Mae and Freddie Mac sent borrowing rates for home loans plunging to 6.06 percent.

What the Experts Were Saying:

Charlie Gasparino reports that Lehman is open to selling the whole operation. He has some strong words for risk-happy Wall Streeters.

Jim Chanos, president of Kynikos Associates, tells CNBC why he's not short Lehman.

The master traders of CNBC's "Fast Money" give their outlooks on Lehman, Goldman Sachs, Capital One and WaMu.