Tuesday, September 16, 2008

why they let Lehman Brothers die?

When Lehman Brothers filed for bankruptcy on Monday, the government essentially sat on the sideline. Six months ago, when Bear Stearns faced a similar fate, the Federal Reserve intervened with the Treasury Department's support.

Why did Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson change their tune?

Experts say the Fed's lack of action on Lehman wasn't as much a change in thinking as it was a change in circumstance. They say simply that the firms were very different - that Bear posed a greater risk - and that regulators were better prepared this time to deal with the consequences of a failure.