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Newly Released Fed Transcripts: Bernanke Chose to Let Lehman Fail
Newly released transcripts cast doubt on the claim that the Fed didn’t have the power to save the investment bank.
by Christopher Matthews, CNN Money:
FORTUNE — September 15, 2008 was a watershed moment for the financial crisis that consigned much of the world to an economic malaise from which we are still recovering. That day, government officials hastily arranged a sale of investment bank Merrill Lynch to Bank of America (BAC), while another bank — Lehman Brothers — was allowed to file for bankruptcy.
The failure of Lehman Brothers sent shockwaves through the global financial system, accelerating the crisis until leaders of the seven largest economies met on Oct. 10 and pledged to not let any more systemically important financial institutions go under. This promise led to the eventual passage of TARP and the much-maligned bank bailouts that, while politically unpopular, helped the world avoid a Great Depression-style meltdown.
