Failed bank cuts off severance payments

Lehman Brothers Holdings Inc, the New York-based investment bank that has fired about 4,000 workers since March, notified some former employees that severance payments were cut off because of the company's bankruptcy.

"Lehman Brothers is unfortunately no longer able to provide the salary continuation or other payments described in your separation agreement," the firm told former workers in a letter dated Sept 30, according to three people with copies of the correspondence. "As a result you will not receive a payment on Oct 3 or after," the letter said.Lehman, once the fourth-largest US securities firm, filed for bankruptcy protection on Sept 15 after taking $13.8 billion in asset writedowns and credit losses in the past year. Chief Executive Officer Richard Fuld told a congressional committee on Monday the firm was overwhelmed by a "storm of fear".

One person who worked for Lehman for 12 years and who declined to be identified said the firm had reneged on its promise to pay monthly severance checks until August 2009. It isn't clear how many ex-Lehman employees are affected by the decision.