The race is on to put together a sale of Lehman Brothers.

Just days after the investment bank’s chief executive, Richard Fuld, tried to pitch a plan to save the firm by shrinking it, he’s in complicated negotiations with potential buyers, including Bank of America and Britain’s Barclays.

It’s even more apparent that the government won’t play the role it did in the sale of Bear Stearns or with mortgage giants Fannie Mae and Freddie Mac. Treasury Secretary Henry Paulson is adamant there will be no government money to bail out Lehman because he believes financial markets have been aware of the bank’s troubles for weeks and have had time to prepare.

Investors grow more convinced that Lehman may be auctioned at a fire-sale price. Its stock drops to $3.65 — an all-time low and down nearly 95 percent from its 52-week high of $67.73.

Meanwhile, troubling signs emerge of a ripple effect should Lehman collapse. Shares of American International Group, the insurer that wrote complicated insurance policies on Lehman debt, fall 31 percent.

— WAMU TROUBLES: Investors are skeptical of Washington Mutual’s assurances that it has enough capital to survive the banking crisis. Shares spike in afternoon trading on rumors that the Seattle-based bank is in “advanced” talks with JPMorgan Chase & Co. about a takeover. But a person close to JPMorgan Chief Executive Jamie Dimon says he won’t be interested without a clearer picture of the risk in the bank’s loan portfolio. Washington Mutual’s stock ends the week down 36 percent.

— IN OTHER NEWS: Wholesale prices fall 0.9 percent in August, the largest drop in nearly two years, and retail sales fall 0.3 percent in the same month.

—MARKET REACTION: The volatile session is narrowly mixed as gains in energy, utilities and materials offset troubles in the financial sector.

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