Fuld says being "dumped on" for Lehman failure

[supernova]

The first anniversary of the Lehman Bros collapse is coming up. Reuters checked in with the guy who made it all possible.

The man vilified for the collapse of Lehman Brothers (LEHMQ.PK) almost a year ago, a failure that triggered the global economic crisis, seemed burdened but not crushed by the pressure of the upcoming anniversary.

....

But it was forced to file the biggest bankruptcy in U.S. history after it choked under the weight of souring assets and lost investor confidence, and as the U.S. government and Federal Reserve failed to find a buyer and decided not to come up with a rescue package.

Fuld was then humiliated before a Congressional panel last October as stock markets spiraled downwards. He was told by one politician that he was the designated "villain" of the day and screamed at by protesters who called for him to be jailed.

Since then, he has mostly ducked the spotlight, allowing an image of greed, arrogance and failure to cling unchallenged to his name.

http://www.reuters.com/article/ousivMolt/idUSTRE5864CH20090907?sp=true



:nopity: :nopity:

[Eric J in MN]

1. Henry Paulson came up with his plan for the taxpayers to buy troubled assets...

...from banks months before Lehman Brothers want bankrupt.

If Lehman Brothers hadn't gone bankrupt, then he would have come up with another justification, also saying that we were on the edge of another Great Depression and scaring consumers.

[supernova]

2. It still begs the question though

How come Lehman was allowed to die and the rest got bailed out?

Were they just a sacrificial lamb, unknowingly the token to fall on their spreadsheets?

[Eric J in MN]

4. Probably one of these three things

1) Henry Paulson wanted to see a big competeitor of Goldman Sachs go bankrupt

2) Henry Paulson wanted to Lehman Brothers to fail as part of a crisis he could exploit

3) Henry Paulson decided to show how much he believes in The Free Market that week

[FarCenter]

3. At the time, Treasury and the Fed were taking a lot of heat for "moral hazard"

In other words, they were being critisized for bailing out banks instead of letting them fold.

So, when it came to Lehman, which was an investment bank and not a commercial bank, I think that Paulson, et al, decided to let it fail and see how that worked.

When it nearly collapsed the global financial system, they changed course in the next day or two to do things like the shotgun marraige of Merrill with BofA and the conversion of Morgan Stanley and Goldman Sachs from investment banks to commercial banks. And of course, there was also the AIG problem, which turned out to be worst of all.