"They put Lehman Brothers to sleep. They executed her."

[Nikki Stone1]

This dovetails with Matt Taibbi's contention that the Goldman Sachs people in government (Paulson, et al) allowed their competitor to die but saved their own firm.


http://www.guardian.co.uk/business/2009/sep/04/lehman-brothers-aftershocks-28-days

How the collapse of Lehman Brothers pushed capitalism to the brink

...In the days that followed, another US bank met its maker. Washington Mutual, a Seattle-based chain with branches throughout the nation, failed in the biggest high-street banking collapse since the war. Goldman Sachs and Morgan Stanley ripped up their business models as standalone Wall Street banks and opted for the shelter of government regulation, in return for a lower risk structure. As far away as Sydney, one of Australian's biggest banks, Macquarie, had to deny rumours of trouble as its stock went into freefall. And on both sides of the Atlantic, governments took the extraordinary step of bailing out and partially nationalising the banking industry.

Charles Geisst, a Wall Street historian at Manhattan College, describes September 2008 as the most momentous financial turmoil since president Franklin Delano Roosevelt declared a mandatory four-day banking shutdown in March 1933 to halt a panic-driven run on deposits. In the wake of Lehman's failure, institutions accustomed to prosperity suddenly realised they were mortal: "It was a message sent to Wall Street banks that they weren't too big to fail. The reaction was really very severe."

Unleashing the forces of evil

Barclays picked up parts of Lehman from the bankruptcy courts, salvaging about 10,000 of the bank's 25,000 jobs. But many still question the wisdom of the US government's decision to stand by and allow a vast investment bank to go bust, given the intertwined nature of Lehman's trading relationships around the globe. Larry McDonald, a former Lehman vice-president, says the Bush administration could easily have offered the guarantee needed to help Barclays buy Lehman outright: "They put Lehman Brothers to sleep. They executed her. They put a pillow over her face."...

Researching a recently published book on Lehman's failure, "a colossal failure of common sense", McDonald interviewed more than 45 Lehman executives. They insisted that they warned both Bush's treasury secretary, Henry Paulson, and the then chairman of the New York Fed, Timothy Geithner, of the consequences of inaction: "They were begging Geithner and begging Paulson. They were saying to Geithner 'you're going to unleash the forces of evil on the global markets - you don't understand what you're doing!'"...

[notesdev]

1. They understood what they were doing

taking out Goldman's competition.

[Nikki Stone1]

2. Yes, and they didn't care if they practically destroyed the nation while doing so

It's the highest level of immorality.

[girl gone mad]

4. It was manipulation...

just like the artificial crisis that was used to stick taxpayers with all of the private debts banks had taken on.

[metapunditedgy]

3. Lehman triggered money-market fund collapse and turmoil, and the government had to

jump right in anyway. Doesn't mean Lehman was worth saving, though. Hopefully, we'll be seeing the lawsuits about Lehman, Bear, Bank of America, WaMu, and everybody else for years to come.

[stray cat]

5. Lehman brothers killed themselves - their death was their fault

Lehman brothers failed and brought many down with them

[unblock]

6. the point is that they pretty much all did the same thing

goldman worked pretty much like lehman did.
sure, lehman is to blame for taking on insane risks, but why did they let lehman suffer the consequences but not goldman?

[Vinnie From Indy]

7. The collapse of Lehman wiped out a large chunk of my father's retirement

He was in their "safest" investment fund. He worked his whole life and played by the rules and they stole his money anyway. Bastards!

[Statistical]

9. Investment assets should have been insured. Has your father put a claim in?

http://www.sipc.org/

Most brokerages have private insurance beyond sipc.
If you father owned Lehman stock or bonds that is a different thing.
SIPC doesn't cover if you invest IN Lehman, it covers if you invest WITH Lehman.

SIPC exists because investor funds should be seperate. For example my 401K was with Meryl Lynch. ML failed but I didn't lose a cent. The plan is now just run by BofA.

When funds are not separated SIPC provides coverage. The loss of your brokerage should not affect your personal assets.

[Vinnie From Indy]

11. Yes, he has made a claim

I am not sure where it all stands right now with him.

[HamdenRice]

8. 2 questions: 1 Are you saying the meltdown was real? 2. Should they have bailed out Lehman?

My answer to both is yes. But it seems to me that there people who will agree with your OP are also people who have said that the meltdown wasn't real and that none of the banks should have been bailed out.

It doesn't seem that those positions are consistent.

[Zynx]

10. The people who claim the meltdown wasn't real are very puzzling to me.

I think it is a classic example of people trying to impose an order to the world that doesn't exist. They want to believe that all of these events have some meaning or purpose behind them, but the truth is many things just happen. Very few things fit into some grand design.