Lehman – One Year Later

by Marilou Moursund on September 15, 2009

in Banks,Credit Crisis,FDIC,Fiscal Policy,TARP

Even though Fannie and Freddie had been nationalized in the weeks leading up to 9/15/08, it was the Lehman bankruptcy and the subsequent takeover of AIG that shook the foundation of our financial system.  Secretary Paulson asked Congress to pass the TARP legislation, and the Treasury guaranteed money market funds and raised FDIC protection.

One year later, the President has called for reform for Wall Street.  As the author of this article in the Financial Times points out though, the wave of consolidation in the financial industry has made a mockery of doing away with the concept of “too big to fail”.  Unless a new regulatory scheme reduces the amount of leverage allowed by these huge institutions, managements will chase a new asset bubble in search of profits.

Update: Paul Volcker and I are in

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