The bankruptcy of the investment bank Lehman Brothers was the pivotal event of the 2008 financial crisis and the Great Recession that followed. Ever since the bankruptcy, there has been heated debate about why the Federal Reserve did not rescue Lehman in the same way it rescued other financial institutions, such as Bear Stearns and AIG. The Fed's leaders from that time, especially former Chairman Ben Bernanke, have strongly asserted that they lacked the legal authority to save Lehman because it did not have adequate collateral for the loan it needed to survive. Based on a meticulous four-year study of the Lehman case, The Fed and Lehman Brothers debunks the official narrative of the crisis. It shows that in reality, the Fed could have rescued Lehman but officials chose not to because of political pressures and because they underestimated the damage that the bankruptcy would do to the economy. The compelling story of the Lehman collapse will interest anyone who cares about what caused the financial crisis, whether the leaders of the Federal Reserve have given accurate accounts of their actions, and how the Fed can prevent future financial disasters.
A Chronology of the Lehman Disaster
Chapter 3. The Legal Criteria for Fed Assistance
Chapter 4. Lehman’s Balance Sheet and Solvency
Chapter 5. Lehman’s Liquidity Crisis
Chapter 6. Lehman’s Collateral and the Feasibility of Liquidity Support
Chapter 7. Fed Discussions of Collateral and Liquidity Support
Chapter 8. Fed Actions That Ensured Lehman’s Bankruptcy
Chapter 9. Possible Long-Term Outcomes for Lehman
Chapter 10. How Risky Were the Fed’s Rescues of Other Firms?
Chapter 11. Who Decided that Lehman Should Fail?
Chapter 12. Explaining the Lehman Decision