LONDON, ENGLAND - LEHMAN Brothers, which fell victim to the credit crunch last month, lobbied the US Federal Reserve to be given access to liquidity this summer but was turned down, the Financial Times reported on Monday.

Lehman discussed with regulators in July a plan to convert from an independent investment bank to a traditional bank holding company, the paper said, citing unnamed sources close to the talks, but the Fed opposed the move.

At the same time, the bank asked regulators to loosen their credit rules to include more types of collateral, but was refused.

Two months later, after Lehman's collapse had sent shockwaves through the markets, the Fed endorsed similar plans from Morgan Stanley and Goldman Sachs and loosened its collateral arrangements to provide them with extra liquidity.

The newspaper also reported that Lehman was in talks about a possible takeover as early as 2006, saying it held 'extensive merger talks' with AIG that year and considered selling itself to other banks including Morgan Stanley, HSBC and Nomura before it eventually filed for bankruptcy last month.