Lehman Died So TARP and AIG Might Live

Discussion in 'Economics' started by wildfirepow, Sep 19, 2009.

  1. "Lehman's fate was sealed not in the boardroom of that gaudy Manhattan headquarters. It was sealed downtown, in the gloomy gray building of the New York Federal Reserve, the Wall Street branch of the U.S. central bank." ~ Stephen Foley, UK Independent

    Stephen Foley is on to something. Lehman Bros. didn't die of natural causes; it was drawn-and-quartered by high-ranking officials at the US Treasury and the Federal Reserve. Most of the rubbish presently appearing in the media, ignores this glaring fact. Lehman was a planned demolition (most likely) concocted by ex-Goldman Sachs CEO Henry Paulson, who wanted to create a financial 9-11 to scare Congress into complying with his demands for $700 billion in emergency funding (TARP) for underwater US banking behemoths. The whole incident reeks of conflict of interest, corruption, and blackmail.

    The media have played a critical role in peddling the official "Who could have known what would happen" version of events. Bernanke and Paulson were fully aware that they playing with fire, but they chose to proceed anyway, using the mushrooming crisis to achieve their own objectives. Then things began to spin out of control; credit markets froze, interbank lending slowed to a crawl, and stock markets plunged. Even so, the Fed and Treasury persisted with their plan, demanding their $700 billion pound of flesh before they'd do what was needed to stop the bleeding. It was all avoidable.

    Lehman had potential buyers – including Barclays – who probably would have made the sale if Bernanke and Paulson had merely provided guarantees for some of their trading positions. Instead, Treasury and the Fed balked, thrusting the knife deeper into Lehman's ribs. They claimed they didn't have legal authority for such guarantees. It’s a lie. The Fed has provided $12.8 trillion in loans and other commitments to keep the financial system operating without congressional approval or any explicit authorization under the terms of its charter. The Fed never considered the limits of its "legal authority" when it bailed-out AIG or organized the acquisition of Bear Stearns by JP Morgan pushing $30 billion in future liabilities onto the public's balance sheet. The Fed's excuses don't square with the facts.

    Here's how economist Dean Baker recounts what transpired last September 15:

    Complete big article-: http://www.marketoracle.co.uk/Article13567.html
  2. While most of the authors are off on their own tangent of explainations, I have one unanswered question.

    In the summer, Fuld requested "bank holding" status and was denied.

    I wonder why?

    Fuld is out there making this request long before others (who were later granted bank holding status) so I could assume this could be legal repreive all the while the Fed are moaning they didn't have legal authority till after LEH failed of course which AIG proves out.

    One more thought while not as important but filed under things I would like to know. The French were po'd that the US gov't would let LEH fail, Lehman failure undermined confidence in the European nations. I would enjoy a global politcal impact editorial and what role European nations played in who saved what for whom.