Oh yes, the Lehman fallout had ramifications which were greater than they imagined at the FEDS. Worldwide that is very clear now. An AIG failure would have been worse.
The government bailout should help the MBS assets which Lehmans holds to have more value but I still don't think receiving .65 cents on the dollars will save Lehman. They were too highly levered to the point where just a 5% decline in asset valuations would tilt them towards a negative net worth. Had they maintained the standards of many institutions and limited themselves to a 10:1 leverage position instead of going 30:1 they would still be a viable player.
It was grossly negligent and risky behavior employed by Robert Fuld and the Lehman board of directors in conjunction with key management. They played the whirlwind and have now reaped its wrath.
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