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Mark Gilbert

Making Sense of Lehman Through Bernanke

His new book doesn't really answer why the bank was allowed to fail.
Why didn't he ride to Lehman's rescue?

Why didn't he ride to Lehman's rescue?

Photographer: Andrew Harrer/Bloomberg

I confess to being slightly obsessed with the schizophrenic zig-zagging by the U.S. authorities that arguably made the credit crisis much, much worse. The feds underwrote the bailout of Bear Stearns, then let Lehman Brothers become the biggest bankruptcy in U.S. history, and the very next day rescued American International Group, and leaving the world of finance bewildered and confused. After reading the latest memoir on the period, I'm still not convinced the principal actors in the drama are being entirely frank about what happened behind the scenes of the real Lehman moment.

My pain is easy to name: The overseers of finance were able to produce a $30 billion loan to persuade JPMorgan to absorb Bear Stearns. They finagled $85 billion more when AIG was heading for the cliff. But in between those two unprecedented bailouts, they say there was no possible way -- no possible way -- to avert Lehman's bankruptcy in September 2008. I find myself unwilling to suspend my disbelief and accept that narrative.