Lehman's Got a Reluctant Safety Net in Uncle Sam

It has been another tumultuous day in trading for Lehman Brothers(LEH Quote), as the firm continued to weave in and out of the rumor-mill blades.

Though several factors will play a part in whether Lehman can keep its head above water, a key question is whether federal regulators will be willing to extend the same assistance they provided for Bear Stearns, Fannie Mae(FNM Quote) and Freddie Mac(FRE Quote) since the start of the year.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke have made tough statements in recent weeks indicating that the government will not bail out any and every financial institution in need of help. And while regulators are trying to avoid the "moral hazard" of removing risk from the market, they're likely to do everything in their power to avoid a major bank failure that would force the financial markets into chaos.

"They're not supporting the brokerage firms because of some vast outpouring of altruism on their part," said Brad Hintz, a Sanford C. Bernstein analyst and former Lehman CFO. "It's not because they want to save the brokerage firms, it's to save the fixed-income parties that continue to deal with them -- in a perfect world they'd be perfectly pleased to see mistakes cause economic losses."

Lehman shares closed down more than 12% to a 52-week low of $12.65 Monday, in a volatile day of trading in which it soared as high as $16.30, a gain of nearly 13%.

The firm was first buoyed by news that regulators would step in to prevent Fannie and Freddie from collapsing. Lehman is a major player in the mortgage-bond underwriting market, meaning that the ultimate fate of those government-backed mortgage lenders will have an impact on its finances as well. Reports on Friday that those companies may become insolvent sent Lehman shares down to the lowest level in nearly a decade.

After the failure of IndyMac Bancorp (IMB) and the government's pledge to backstop mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE), what will be the next financial company to require federal help?
	Lehman Brothers (LEH) Washington Mutual (WM) National City (NCC) Downey Financial (DSL) Let the market sort all this out.