Northern sued by college over loss

For 20 years, Chicago-based Northern Trust Corp. held the hand of the University of Washington, providing it the kind of steady, safe investment services that earned the bank its nickname "the Gray Lady of LaSalle Street."

But over the course of a few dramatic days in September, all that changed. The Wall Street financial disaster that took down such titans as Lehman Brothers Holdings Inc. and Washington Mutual Inc. also damaged Northern's relationship with the school, proving that even the most staid financial dealings have become vulnerable to the turmoil sweeping the country.

A suit filed in Seattle by UW describes the harrowing days following Lehman's collapse, when mounting losses in Northern's once-steady securities-lending business stunned the university and allegedly pushed Northern to seek the help of the Federal Reserve and U.S. Treasury Department. Those requests were rejected, the suit said.

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