"Dick Fuld would be crazy not to sell Lehman Brothers now,” one of the leading figures on Wall Street told me early last year. Its business was booming and could only get worse, he argued. With its continued dependence on mortgages, Lehman remained vulnerable to a big market setback.

Sadly for Mr Fuld, his investors and his employees, he didn’t sell then. He could have got a fortune. He could still have got a good price a year ago. He could probably get a decent sum even now. The fear among some employees is that he just cannot accept that so much value has been lost.

The word is that negotiations with potential investors have foundered over Mr Fuld’s view of what Lehman is worth. It is said to be a long way from what investors are prepared to pay.

Mr Fuld is a proud man, and he has a lot to be proud of. Lehman nearly went under ten years ago, but he kept his nerve and built a business that last year was worth more than $50 billion. It would be understandable if that pride is making it hard for him to stomach what may have to be done.

By rushing out its third-quarter figures and sketching out its plans to shore up market confidence, Mr Fuld will hope that he has bought some time.

Now that Wall Street investment banks can borrow directly from the US Federal Reserve, Lehman should be able to avoid the sort of run on the bank that sank Bear Stearns. But maintaining market confidence remains vital for preserving the potential value of the business.

Executives say that the business has not suffered too badly relative to the competition in recent weeks. But Lehman admitted yesterday that the confidence of clients and counterparties had been badly damaged by the plunge in the share price on Tuesday. That makes the fact that the share price suffered further yesterday doubly worrying. Much more of this and the value will start to evaporate.

The plans outlined yesterday were much as expected. Lehman is proposing to demerge most of its commercial property holdings into a separate company. This will be spun off to existing shareholders.

The move should reduce the risk of the remaining “core Lehman” while giving shareholders the potential upside in the commercial property that the new company should be able to hold for longer-term recovery.

However, Lehman needs to inject up to $7 billion in equity into the new vehicle. This will be freed up by the sale of a majority stake in its Neuberger Berman investment management business and by further shrinking the core Lehman balance sheet.

The plan has been in the works for some time, but Mr Fuld was unable to name the potential buyer of the stake in the asset management business or give any indication of the price.

Lehman said that it expected to announce a deal in due course, which rather failed to convey the appropriate sense of urgency.

It will take longer still for Lehman to be shot of the $30 billion of commercial property assets that will not be jettisoned until next year.

Meanwhile, Lehman will bear the risk of further writedowns. Given recent experience, it is hard to feel confident in Lehman’s “stress-tested” valuations.

All this buys Mr Fuld very little time. He may be right to keep his nerve and hold out for a better price. But he has been terribly wrong so far. Unless he can rebuild market confidence very quickly, he will have to sell the bank, and sell it soon.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive