Bernanke, Geithner and Paulson ‘have invented alternative history’ of Lehman collapse, professor says
In MarketWatch interview, Laurence Ball talks about his new book ‘The Fed and Lehman Brothers’
Nearly ten years ago, Lehman Brothers, declared bankruptcy after a frantic weekend of unsuccessful talks to find a buyer at the New York Fed. Lehman’s collapse followed the takeover of Bear Stearns in early March by J.P. Morgan Chase JPM, +0.90% that was assisted by a Fed loan and the government takeover of Fannie Mae FNMA, -0.68% and Freddie Mac FMCC, -0.93% . The outcome has always been controversial.
An economics professor at Johns Hopkins University, Ball says there was no discussion of Lehman’s collateral or the legality of a loan during the crucial weekend. In addition, he said that Lehman did have enough collateral, if anyone had looked. Other analysts, including Joseph Gagnon of the Peterson Institute for International Economics, have argued that Lehman was probably deeply insolvent at the time of its bankruptcy.
“They could have made a loan, it would have been legal, it would not have been very risky, and probably the whole financial crisis and Great Recession would have been less severe.”
https:// secure.marketwatch.com/story/bernanke-geithner-and-paulson-have-invented-alternative-history-of-lehman-collapse-professor-says-2018-07-25?mod=newsviewer_click