Quote

In truth, in the fairy-tale version of bailing out Lehman, the next domino, A.I.G., would have fallen even harder. If the politics of bailing out Lehman were bad, the politics of bailing out A.I.G. would have been worse. And the systemic risk that a failure of A.I.G. posed was orders of magnitude greater than Lehman's collapse.

The failure of Lehman may have allowed the government to do more to prop up the economy than it otherwise could.

No one suggested Lehman deserved to be saved. But the argument has been made that the crisis might have been less severe if it had been saved, because Lehman's failure created remarkable uncertainty in the market as investors became confused about the role of the government and whether it was picking winners and losers.

The assumption that Washington could and would resolve Lehman Brothers without a bankruptcy, as it had Bear Stearns, was the single biggest mistake in the series of mistakes in 2007 and 2008 that led to the financial panic and the ensuing epidemic of job losses.

In our equities business, 49 of the 50 most important Lehman clients are back doing business with us. The flows are 75 to 80 per cent of what they were prior to the bankruptcy. The issues which damaged Lehman were around commercial mortgages and illiquid private equity assets.

There's something called, 'resolution authority,' which gives the government the power to takeover a failing bank - something they didn't have pre-Lehman Brothers.

I often say to entrepreneurs, 'If Lehman Brothers were Lehman Brothers & Sisters, it wouldn't have gone into bankruptcy.'

When I left my job at Lehman Brothers to start a company, my best friend's mother said, 'How could you leave a sure thing like Lehman to do a silly carpool startup?' That was three months before Lehman went bankrupt.

I won't dispute that bankers' privileged treatment in the 2008 crash merits populist scorn. But unfortunately, without a bank bailout, there probably would have been a worldwide depression.

We, of course, have the power of hindsight in our arsenal, but people living in Berlin in that era didn't. What would that have been like as this darkness fell over Germany?