Tomorrow and for the next few days after I'll be on the road, so apologies in advance if there's any sort of reaction to the below and I don't answer. But I felt like I had to write this. I knew the details would get lost, so last year, when Lehman went down, I saved all of the current news I had seen on it in one place, for reference on the inevitable day that forgetfulness would set in and someone, somewhere, would write something like what Niall Ferguson did in today's Financial Times: The bolded statement is a flat-out lie. The true circumstances of what happened to Lehman were recorded in real time last year. Almost all of the info is, fortunately, still out there, and the sum total of it shows just how much of a lie that statement is. To begin at the beginning: we all know that in March Bear Stearns was sold to JP Morgan for, at first, 2 bucks. This shocking development made clear that the value of any financial company out there was in question. Then, the GSE's, Fannie and Freddie, began to go down because of their narrow investment base: all mortgages all the time. The response of Treasury? To push out preferred shares and encourage banks to buy these preferreds. John Dizard on Aug 31 said the following (bear in mind this was before the infamous TARP): So, when the time came, mere days after this column was written, to save Fannie & Freddie, what did Treasury do? I quote from their release: Yes, they hung the preferred investors out to dry. Did the market agree with the Treasury about the idea that "GSE preferred stocks are not a good proxy for financial institution preferred stock more broadly"? In a word, no: Fitch lowered Lehman's ratings on Sept 9. This is the only link still not up, but at the time, Fitch lowered Lehman's ratings - and this is the important part - not because they thought it was in imminent danger of going down, but because they thought it would have a hard time raising capital. The reason why is above, in that Bloomberg article. Lehman's death spiral was on. Shortly after its death, Paulson saved AIG. Coincidentally - or not - GS had a large exposure to that company, as we all now know. What happened on Sept 15 happened because of the deliberate decisions made in the months preceding by the Treasury Dept led by Hank Paulson. The TARP, at a mind-boggling 750 billion, well over even the most pessimistic projections of John Dizard if the preferreds on the GSE's got trashed, back on August 31, in the column quoted above, followed. Selah.