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Letting Lehman Fail Was a Mistake, Bookstaber Says

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By Barry Ritholtz - September 11th, 2009, 1:45PM

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3 Responses to “Letting Lehman Fail Was a Mistake, Bookstaber Says”

  1. leftback Says:
    September 11th, 2009 at 2:08 pm

    Not really a “mistake” at all, since it was allowed to fail by H Paulson, in order to open new markets for GS.

  2. clawback Says:
    September 11th, 2009 at 10:42 pm

    Say Lehman gets bailed out, then what? The arguments for bailouts are arguments that necessarily require further bailouts. Say you bail out C, BAC, et al., then what? Obviously, you bail them out again a few months later. And then you nix FAS 157. Then you hope and pray you won’t need PPIP after all. But then what? Then you have Too Bigger To Fail. At some point losses will have to be recognized and booked, but when and by whom? Tim Geithner thinks the financial system is “healing.” Bull shit. Every month that we extend and pretend is a month that DAMAGES the system. Geithner, Bernanke, et al. believe that central planning can work for the financial system, but they don’t call it that and they don’t even know that it’s central planning. But the results will be the same regardless — politically connected players will win at the direct expense of other players, and the system as a whole will be weaker because capital has necessarily been mis-alocated.

  3. Northern Observer Says:
    September 12th, 2009 at 8:42 am

    The focus is all wrong. Corporations, their managements, their employees, their shareholders, bondholders and lenders are all expendable, and preventing them from facing the consequences of their actions only produces future incompetence, inefficiency and failures.
    The flip side is that you should bail out individuals as individuals through the social safety net, unemployment benefit, free education grants, state subsidized medical care, etc…
    America’s problem is that it bails out corporations from their bad decisions but makes individuals suffer through theirs. This is economically inefficient because individual workers stuck in debt with unwanted skills and facing personal despair are not going to be the key employee or entrepreneurs of tomorrow. It’s a waste of human capital that is all the more perverse when you see how much is spent to prop up failed institutions.