Get Set for Disorderly Lehman Liquidation

Barclay's dropping out of a Lehman deal means that the Feds lost a game of chicken with the big banks holding Lehman mortgages, and now there will be a disorderly liquidation of Lehman assets, instead of the orderly liquidation that would have been possible with a real buyer, James Cramer writes on TheStreet.com. The question is how big a hit those owning Lehman mortgages will take.

Since Lehman was "the worst mortgage lender among the majors," Cramer writes, we can assume their assets are pretty toxic. So "the market gets hit hard for a couple of days, and  the bears try to break Merrill, AIG and Citigroup, and then there's really no one else left that's in big trouble right now." (More Lehman Brothers stories.)