Wall Street barons are braced for a turbulent week as financial trouble piles up for big US investment banks, which are battling America�s worst financial crisis since the Depression.

Wall Street barons are braced for a turbulent week as financial trouble piles up for big US investment banks, which are battling America's worst financial crisis since the Depression.

Lehman Brothers rattled the street last week when a larger-than-expected fiscal third-quarter loss was followed by a full-scale effort by regulators and rival banks that continued over the weekend to rescue the bank from possible bankruptcy.

Its stock has plunged more than 80% this year to lows not seen in more than a decade as investors fretted about its continuing exposure to mortgage-related investments. It is due to release full results on Thursday.

Wall Street remains skittish about financial stocks since the near-collapse of Bear Stearns in March. Global banks have so far lost more than $300bn from mortgage-backed securities and other risky investments.

Analysts are expecting more gloomy news when Goldman Sachs and Morgan Stanley report their operating results this week. Merrill Lynch, another publicly-traded Wall Street investment bank, does not report its next quarterly results until mid-October.

August was a difficult month for Wall Street firms, capping a tortuous quarter for most of the securities industry's key businesses. Commodities trading, prime brokerage, private equity, investment banking, and most equity and credit market activities were lacklustre.

This is expected to depress earnings at Goldman Sachs and Morgan Stanley.

Analysts have been lowering earnings estimates for all three banks. However, Lehman Brothers is in a class of its own. The bank, which as recently as last autumn was hailed as well run, announced on Wednesday that it lost $3.9bn in the fiscal third quarter, well above analysts' expectations. In addition, the bank said that it was marking down the value of commercial and residential real estate investments by $7.8bn. Lehman's dividend was slashed from 68 cents to a mere five cents a share.

To stabilise the firm and restore investor confidence, Lehman said it intends to spin-off $25bn to $30bn of its commercial real estate holdings into a new publicly-traded company called Real Estate Investments Global. This is expected to take place in the first quarter of 2009.

The bank also plans to sell about 55% of its Neuberger Berman investment management business.

Unlike Bear Stearns, which was taken over earlier this year after it ran into a liquidity crisis, Lehman has access to new Federal Reserve facilities that can provide short-term funding when the markets will not, as well as the ability to exchange illiquid assets for safer securities such as Treasury bonds.

That makes a sudden run on an investment bank less likely than it was a few months ago. The facilities for dealers were not in place when Bear Stearns faced its crisis.

Wall Street observers say the big investment banks got into trouble because they made too many bad bets in the sub-prime mortgage market.

For the first time, questions are swirling around Goldman Sachs, an institution that has avoided the housing-bubble-related problems that have caused competing investment banks to reduce the value of investments by so many billions of dollars.

Though Goldman Sachs is expected to report tomorrow that it earned $2.06 per share in the fiscal third quarter, compared to $6.13 in the year-ago period, a recent sharp drop in commodities prices is weighing on the company.

The perception among many institutional investors is that Goldman Sachs' extraordinary earnings this year were largely fueled by trading commodities, many of which plunged in August.

Morgan Stanley is considered to be in better shape than Lehman Brothers or Goldman Sachs.