The developments indicate that chief executives on Wall Street and regulators in Washington are accepting that massive triage is necessary in the face of the 13-month old credit crisis and destructive U.S. housing bust.

"The U.S. financial system is finding the tectonic plates underneath its foundation are shifting like they have never shifted before," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey."It's a new financial world on the verge of a complete reorganization."

On Sunday, growing expectations that Lehman will become Wall Street's most high profile bankruptcy since junk bond specialist Drexel Burnham Lambert collapsed in 1990 sparked a sell-off in U.S. asset prices. Lehman's announced it was filing for bankruptcy midnight Sunday.

Both US stock futures and the dollar plunged in reaction to the turmoil on Wall Street.

Sunday's events signalled a transformation in the power structure on Wall Street with major banking groups like Bank of America ,which has agreed to buy Merrill for $50 billion,and JPMorgan Chase becoming more dominant.

Once Lehman and Merrill disappear, three of the top five U.S. investment banks would have dissolved or been bought inside six months. Bear Stearns was acquired in a fire sale by JPMorgan in March.

The focus early Sunday was on whether talks between regulators and Wall Street's top bankers would lead to the sale of Lehman, until recently the No. 4 U.S. investment bank.