Re: "The handling of the Lehman failure was a terrible event..."
Hindsight is always wonderful.
But, at the time, the policy debate (intervene or don't intervene) was fairly evenly balanced within the halls of power... and the truth is that NO ONE really *knew* what the result of either policy would be.
(And, I'll admit, I was personally in the camp of "Hell no! Don't rescue them with public money!" :-)
With a policy debate so finely balanced, ample hypotheticals to support each side, only trial and error could produce a useful answer.
(For the record: I believe that it was the government FAILURE to properly regulate the industry, which failure to have proper and appropriate risk-reduction rules in-force CREATED the problem of over-levered financial institutions and too much systemic risk, that moved us to the situation where we only had a menu of bad choices to select from. NONE of which, at that late date, were entirely 'right' or without great harm.)
The truly important question that needs to be asked is NOT 'should the government, at that late date, stepped in to rescue Lehman or not?'
Rather, the best question to ask is 'what went wrong in the decade or two previous to the Lehman failure point which GREW our financial system into such a shaky and perilous mess of interlinked risks?' |
