Skip to comments.Ex-BoE member astounded U.S. govt didn't save Lehman
Posted on 09/13/2009 7:25:27 PM PDT by NormsRevenge
LONDON (Reuters) The former deputy Governor of the Bank of England said he was "astounded" the U.S. government let Lehman Brothers go under, and that the bank's collapse marked a clear moment when people lost confidence in the markets.
Sir John Gieve said in an interview with Sky News he had fully expected U.S. authorities to step in this time last year to rescue the stricken investment bank, as it had done earlier with peer Bear Stearns.
The Federal Reserve put up $29 billion in March 2008 to underwrite JP Morgan Chase's (JPM.N) rescue of Bear Stearns, and was forced to step in again last September days after Lehman Brothers' failure to prevent AIG from collapsing.
By propping up Bear Stearns, the Fed "created a presumption ... that the safety net had now been widened," which was then "dash(ed) to pieces" by the inaction over Lehmans, Gieve said in the interview to be broadcast on Monday.
(Excerpt) Read more at news.yahoo.com ...
Lehman Bros. had to go under in order for Obama and his band of ‘RATS to gain control of the American government and its economy.
Lehman’s collapse — an insider’s view
P. Parameswaran P. Parameswaran Sun Sep 13, 5:34 pm ET
WASHINGTON (AFP) A chill runs down the spine of Lawrence McDonald every time he drives past the Wall Street building of collapsed investment bank Lehman Brothers, where he was one of the most profitable bond traders.
“The big takeaway is that the fate of 20,000 souls was determined in that building, especially on the 31st floor,” McDonald, 43, told AFP in an interview ahead of the first anniversary Tuesday of Lehman’s collapse.
The 158-year-old Lehman filed for bankruptcy protection on September 15, 2008, in the largest US bankruptcy filing in history, leaving the future of 25,000 staff in jeopardy and sending a financial tsunami across the globe that continues to reverberate today.
But McDonald thinks Lehman, which collapsed under the weight of hundreds of billions of dollars in risky mortgage-backed securities, could have been saved if the bosses would have heeded a number of clear early warnings.
The top Lehman leadership, housed on the bank building’s 31st floor, “drove us a 162 miles (261 kilometers) an hour... right into the biggest subprime iceberg ever seen.”
Bank chief executive Richard Fuld and president Joe Gregory heard warnings beginning in 2005 that the property market, on which they were “betting the ranch,” was on the verge of collapse but turned their backs each time, McDonald charged.
“It was 24,992 people making money and eight guys losing it,” said the man who rose from a humble pork chop salesman to top-notch Wall Street trader — once his team made 250 million dollars in a single day.