Lehman and Federal Reserve Assets
Big arrow: Lehman’s bankruptcy filing.
Small arrow: Bear Stearns “crisis”
data source: Financial System Review, december 2008, bank of canada, page 14
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December 14th, 2008 at 1:30 pm
So Lehman was too big to be allowed to fail, but they allowed it to fail anyway?
December 14th, 2008 at 1:42 pm
well, they allowed it to fail because they thought markets would remain orderly, talking about misreading the consequences…
as mentioned in the post “Official: the Fed is clueless” :
The Fed board members assured Griffin (citadel) that the markets would remain orderly as Lehman unwound its positions.
December 15th, 2008 at 8:13 am
Apparently Sunday trading sessions are not enough:
“That’s why Mr. Miller says it was crucial for the government to head off the wholesale termination by counterparties of all their transactions with Lehman before the firm was forced into bankruptcy. “If the Fed or the Treasury said, ‘Let’s say to Lehman, there’s no bailout, we’re not going to save the company,’ they could have supported an orderly unwinding of all the transactions over a period of months,” he says. “It probably would’ve cost the economy a lot less money.”
-Lehman’s undertaker
http://www.nytimes.com/2008/12/14/business/14miller.html?_r=1&ref=business&pagewanted=all
Oh, and Dick Fuld is rumored to be looking to get into advisory, once his contract with Lehman is up at the end of the year.