Letting Go Of Lehman Brothers

Mini-case 2 Letting Go of Lehman Brothers Question 1: Do you believe that the U.S. government treated some monetary institutions differently during the crisis? Was that appropriate? To assure the financial st cleverness and viability of the U.S. financial system, the U.S. national official check, the Comptroller of the Currency and the national Deposit insurance policy caller-up (FDIC) have the responsibility to support, protect and buffer financial institutions whose reverses, they believe, competency have a significant effect on the marketplace as a whole. Before making a finality about whether an institution should be poured capital into, the Federal Reserve will consider the institution`s verifying and the ability to repay loans. The Federal Reserve said that the companies that did get word bailouts, much(prenominal) as AIG, Fannie Mae and, Freddie Mac, clearly had the substantiating and showed great promise of paid them back in the future, while Lehm an Brothers did non. When Federal Reserve bear Ben Bernanke was asked how the Lehman case differed from that of American International Group Inc., which received $182 jillion in taxpayer aid, Bernanke said there was a fundamental difference. They believed AIG, as the biggest insurance company in the U.S., had valuable assets which could back up the Feds emergency loan.

So the Federal Reserve will utterly be paid back by AIG. However, Richard S. Fuld Jr., the former president and chief executive officer of Lehman Brother, said that they did have the collateral and the capital, and should have been bailed out. He also stated that Lehman was forced into failure not because it neglec ted to act responsibly or father solutions! to the crisis, but because of a decision, based on flawed information, not to provide Lehman with the support given to each of its competitors. (Lewis, 2010) Zakaria (2010) believes that the collapse of Lehman Brothers floor the political system into coming to the rescue, into recognizing that this was a huge, deep...If you want to lunge a full essay, order it on our website: OrderEssay.net

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