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.
Sentiment: NEGATIVE
The failure of Lehman may have allowed the government to do more to prop up the economy than it otherwise could.
I often say to entrepreneurs, 'If Lehman Brothers were Lehman Brothers & Sisters, it wouldn't have gone into bankruptcy.'
I never once considered that it was appropriate to put taxpayer money on the line in resolving Lehman Brothers.
In addition to their power over government based on government financing and personal influence, bankers could steer governments in ways they wished them to go by other pressures.
We cannot allow the bankruptcy of a euro member state like Greece to turn into a second Lehman Brothers.
Financial crises require governments.
The blowback against a bailout of Lehman would have been fierce. It is often forgotten, but the prevailing wisdom the day after Lehman fell was that its collapse was a good thing.
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 banking collapse was caused, more than anything, by bad government policy and the total failure of bad regulation, rather than by greed.
We support too big to fail. We want the government to be able to take down a big bank like JP Morgan and it could be done. We think Dodd-Frank, which we supported parts of, gave the FDIC the authority to take down a big bank.