Policy makers have signaled that they are not willing to provide financial support for a takeover of Lehman, as they did with Bear Stearns. Unlike Bear Stearns, which lost many clients and its access to money markets in just a few days, Lehman has been able to finance its business, especially after investment banks were allowed to borrow directly from the Fed. But the quality of the securities it owns are still in question.

The Fed and Treasury continue to insist that Wall Street firms find a way to rescue Lehman because their own companies might be next. But the Lehman crisis comes at a time when many of them are also short on capital. Entities that do have cash ready to invest, namely private equity firms, are not at the table.

That is because regulators do not want those firms, which borrow money to buy companies, controlling major financial institutions that provide the financing for their acquisitions. Many foreign investors, for their part, are reluctant to buy now after having seen earlier investments drop sharply in value.

The decision by policy makers sets up a crucial test for the financial system: Can the market resolve the panic by pairing Lehman with a willing and strong suitor, or will the company be forced to liquidate?

Whatever the outcome, there is a growing consensus on Wall Street that the government may not be able to save every big firm whose failure would pose a risk to the system.

Image Investors on the New York Stock Exchange, where Lehman Brothers is traded, were wary of banks and insurers last week. Credit... Kate Glicksberg for The New York Times

“The too-big-to-fail mantra or concept or government policy is, in my opinion, off the table and we have to deal with that,” said David H. Ellison, president and chief investment officer at FBR Funds, a mutual fund company. “They are not going to save these companies.”