NEW YORK (Bloomberg) — Lehman Brothers Holdings Inc. entered into talks with potential buyers of the securities firm after Moody's Investors Service said the company must find a "stronger financial partner" and the shares plummeted.

Bankers from other firms were reviewing Lehman's books yesterday, people with knowledge of the situation said, declining to identify the potential acquirers. Bank of America Corp. is among the potential buyers, the Wall Street Journal reported, citing unidentified people. Spokesmen for Lehman and the bank declined to comment.

Without a "strategic arrangement" in the "near term," Lehman's credit-ratings may be downgraded, Moody's said yesterday after the New York-based investment bank announced the biggest loss in its 158-year history. A downgrade could increase Lehman's borrowing costs and deter others from trading with the bank. Lehman, led by chief executive officer Richard Fuld, fell 42 percent in New York trading yesterday, ceding its spot as the fourth-biggest US securities firm by market value to Raymond James Financial Inc. in St. Petersburg, Florida.

"While the number of potential acquirers at this point is very few, Moody's action certainly raises the spectre of takeout, potentially at a very low price," said Merrill Lynch & Co. analyst Guy Moszkowski in a report yesterday. He lowered his recommendation on the stock to "no opinion," saying a potential "take-under" makes it hard to gauge a price target.

Lehman fell $3.03 to $4.22 at 4.15 p.m. in New York Stock exchange composite trading. The drop reduced Lehman's market value to about $2.9 billion. Raymond James, a regional brokerage, is valued at about $3.8 billion.

"The likely solution is that someone will bail it out and at this rate it may be for a nominal sum," said Simon Maughan, a London-based analyst at MF Global Securities Ltd. "The market is not going to give Lehman time to get on with its plan."

Goldman Sachs Group Inc., the biggest US securities firm, has no plan to buy Lehman without financial backing from the Federal Reserve or Treasury, which hasn't been offered thus far, a person briefed on the matter said yesterday. Goldman spokesman Michael DuVally said the investment bank "continues to do business" with Lehman.

Michele Smith, a spokeswoman for the Fed, declined to comment on Lehman. Treasury is "monitoring markets," and is "in regular contact" with market participants, spokesman Jennifer Zuccarelli said.

Nomura Holdings Inc., Japan's biggest investment bank, may bid for a stake in Lehman, the Yomiuri newspaper cited Nomura President Kenichi Watanabe as saying last week. Michiyori Fujiwara, a Tokyo-based Nomura spokesman, declined to comment yesterday. Nomura has a market value of $28 billion.

Asked yesterday whether he'd consider selling the firm, Fuld didn't rule it out.

"I have always said that if anybody came with an attractive proposition that made it compelling for shareholder value, that would be brought to the board, discussed with the board and evaluated, and that has not changed," Fuld said on a conference call with analysts.

Several of the largest European banks may be tempted to buy Lehman to bolster their presence in the US, analyst Richard Bove said earlier this week. Ladenburg Thalmann & Co.'s Bove speculated that HSBC Holdings Plc, Europe's biggest bank by market value, could be a suitor. London-based HSBC said yesterday it was "highly unlikely" to buy an investment bank.

Josef Ackermann, the CEO of Deutsche Bank AG, Germany's largest bank, said yesterday in Frankfurt that he wasn't interested in "parts or all of Lehman."

Lehman said yesterday it's in the process of selling a majority stake in its asset-management unit, spinning off real-estate holdings and cutting the dividend in an effort to shore up capital and regain investor confidence. The announcement failed to assuage investors' concerns and the shares sank seven percent, after a 45-percent drop the day before.

Pressure on Fuld, the longest-serving CEO on Wall Street, mounted this week after talks about a capital infusion from Korea Development Bank ended. Fuld, 62, is striving to convince investors that the firm will stem losses on securities tied to real estate even as housing prices decline. He and his management team also must keep clients and employees from leaving.