Green Options » Federal Reserve http://greenoptions.com/tag/federal-reserve Posts tagged 'Federal Reserve' Wed, 15 Oct 2008 06:26:01 +0000 http://wordpress.org/?v=2.5.1 en Economy In Recession: The Cost Of Allowing Lehman Brothers to Fail http://inspiredeconomist.com/2008/10/15/economy-in-recession-the-cost-of-allowing-lehman-brothers-to-fail/ http://inspiredeconomist.com/2008/10/15/economy-in-recession-the-cost-of-allowing-lehman-brothers-to-fail/#comments Wed, 15 Oct 2008 06:26:01 +0000 Reenita Malhotra http://inspiredeconomist.com/2008/10/15/economy-in-recession-the-cost-of-allowing-lehman-brothers-to-fail/ The failure of Lehman Brothers is seen as the last straw that broke the credit market. The financial markets have been in a state of complete disarray ever since the U.S. Government allowed Lehman Brothers to file for bankruptcy on September 15th 2008 instead of intervening to save it, as it did with Bear Sterns and later with the insurance company, American International Group.

Many have questioned U.S. Treasury Secretary Hank Paulson’s decision to let Lehman Brothers fail. Christine Lagarde, French finance minister, claimed that the decision was “horrendous.” This has been echoed by many other European policy makers and investors who blame the decision on ideology, claiming that Paulson refused to offer aid to avoid accusations of moral hazard.

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