Wednesday, September 1, 2010

Why The NY Fed Allowed Lehman To Fail

From the testimony of Thomas C. Baxter Jr., Executive Vice President and General Counsel of the Federal Reserve Bank of New York, on September 1, 2010, before the Financial Crisis Inquiry Commission, Washington, DC:
"Why did you allow Lehman to fail?" It is an understandable question, but one that nevertheless contains a false premise. The Federal Reserve did not "allow" Lehman Brothers to die, bankruptcy being the equivalent of death to a financial company. Instead, the Federal Reserve, the United States Treasury Department, the Securities and Exchange Commission (SEC), and others tried hard to save it—not for its own sake, of course, but for the sake of all the families and businesses who would be harmed by the devastating effects of a Lehman bankruptcy. We did not succeed, but the effort made was serious and determined. We came very close.
Read Baxter's complete testimony on why the NY Fed could not and did not save Lehman Brothers from bankruptcy here.

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