The report revealed that five executives took £42m in pay and pensions from the troubled firm as it collapsed.

Another troubled firm for which Bear Stearns cleared trades made headlines on Thursday.

Traders said yesterday that market participants were generally relieved by the report because it removed a large part of uncertainty surrounding the troubled firm.

In a crisis, troubled firms could tap the fund.

According to the Wall Street sources, some disgruntled Salomon officials have been awaiting the chance to withdraw their money before departing the troubled firm.

The financially troubled firm re-entered the municipal bond market in November after an absence of nearly two years.

Politicians were not prepared to risk the fragile social consensus by allowing troubled firms to go to the wall.

The blow came after staff were asked to take a 10pc pay cut by the troubled firm, in a bid to save posts.

The bosses of a troubled firm and the shareholders that appoint them choose between chapter 11 and workouts.

The troubled firm sought salvation with an aggressive push into the malt liquor market.