• Dwight Anderson's Ospraie Management is shutting down its flagship fund after a 27 percent loss in August in the commodities market. [WSJ]

• The price of oil has dropped after Hurricane Gustav did less damage than initially feared. [CNNMoney]

• Lehman slashed 1,500 jobs yesterday. But job cuts are expected at several other banks around town very soon. [NYT]

Lehman Brothers is laying off as many as 1,500 people. [Dealbreaker]

• Temasek, Singapore's sovereign wealth fund, has "great confidence" in Merrill CEO John Thain. [Bloomberg]

• The merger market is experiencing its slowest August in 16 years. [Reuters]

• Obama now has a running mate. But now Joe Biden's son and brother are in the news over a hedge fund that went sour. [WaPo, Dealbook]

• An analyst suggests Lehman may be a hostile takeover candidate; a WSJ reporter explains why that's unlikely; and another points out the difficulty involved in selling off its asset management business. [NYP, WSJ, WSJ]

• Lehman Brothers' Dick Fuld was near a deal to raise $5 billion from South Korean investors, but negotiations broke down earlier this month. [NYP]

• Lehman Brothers continues to have discussions about selling pieces of its investment management business, including Neuberger Berman. [Dealbook, FT]
  

• Analysts are steeling themselves for a loss of as much as $1.8 billion when Lehman closes out the third quarter in a few weeks. [WSJ]

• U.S. inflation soared to a 17-year-high annual rate in July. [WSJ]

In an SEC filing, Yahoo reported that through June, it spent $36 million on fees for third-party advisors helping it deal with Microsoft's unsolicted bid for the company and all its fallout. The New York Times figures most of the money went to financial advisors Goldman Sachs, Lehman Brothers and Moelis & Company. Skadden Arps provided Yahoo with legal advice.

• Morgan Stanley has offered to buy back about $4.5 billion in auction-rate securities from clients, following a similar offer by Merrill Lynch last week. The move came after Attorney General Andrew Cuomo's office sent out another round of letters to banks, including Morgan Stanley, JPMorgan Chase, and Wachovia. [Bloomberg, WSJ]

• Lehman Brothers chief Dick Fuld is in discussions with several private-equity and foreign investors about raising even more capital for the struggling bank. [NYP]

• Henry Kravis and George Roberts's KKR will become a public company by the end of the year in a complex deal that may ultimately value KKR at $15-20 billion. [Bloomberg]

The Wall Street Journal has the skinny on the hedge funders who are "defying skeptics who questioned whether they could keep their runs going." John Paulson's fund is up 20 percent through the end of June; Phil Falcone's Harbinger Capital Partners I is up 42 percent; and Daniel Arbess, who oversees Perella Weinberg's Xerion fund, posted a 25 percent gain. What about Lehman short-seller David Einhorn, who earned such breathless coverage from New York a few weeks ago? "Up only a few percentage points through June." [WSJ]

• Yahoo and Carl Icahn have reached a settlement: Icahn and two of his nominees will join the board of the company. [AP]

• Did Goldman Sachs have a hand in the downfall of Bear Stearns? London-based traders at the firm are now under investigation for spreading negative rumors [WSJ]

• Lehman Brothers is said to be weighing a plan to take the firm private. [NYP]