Tuesday, December 16, 2008

Failure to Support Lehman a Major Blunder?

We all know that the government refused to support Lehman, and let it go into bankruptcy. While many folks believe that the bailouts are entirely wrong, given the scope of the bailout, and the impact of the Lehman bankruptcy, there is no dispute that given the course of action chosen by the Government, the Fed and Treasury, the failure to assist Lehman was a huge blunder.

And apparently Paulson, Benake, et al know it, because they have offered conflicting reasons for not assisting Lehman. First it was that Lehman did not have the assets to support a bailout, then it was that there was some unidentified legal prohibition.

The NY Times is now reporting that right after stating that it would not use taxpayer money to support Lehman, the Fed turned aroudn and lent tens of billions of dollars to support a Lehman subsidary, using the same assets to secure the funds, that the Fed only days earlier said were inadequate to support Lehman.

Something is fishy here. And Lehman investors, customers, brokers and employees are paying the price.

http://www.nytimes.com/2008/12/16/business/16sorkin.html?_r=1&ref=business

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