Letting Go Of Lehman Brothers

Mini-case 2 Letting Go of Lehman Brothers Question 1: Do you believe that the U.S. government treated some pecuniary institutions differently during the crisis? Was that appropriate? To assure the financial st cleverness and viability of the U.S. financial system, the U.S. federal official official check, the Comptroller of the Currency and the federal official Deposit amends caller-up (FDIC) have the responsibility to support, protect and buffer financial institutions whose bankruptcys, they believe, competency have a significant effect on the marketplace as a whole. Before making a finality about whether an institution should be poured capital into, the Federal Reserve will consider the institution`s formalize and the ability to repay loans. The Federal Reserve said that the companies that did prevail bailouts, much(prenominal) as AIG, Fannie Mae and, Freddie Mac, clearly had the confirmatory and showed great promise of nonrecreational them back in the futu re, while Lehman Brothers did not. When Federal Reserve cultivate Ben Bernanke was asked how the Lehman case differed from that of American International Group Inc., which received $182 zillion in taxpayer aid, Bernanke said there was a fundamental difference. They believed AIG, as the biggest insurance company in the U.S., had valuable assets which could back up the Feds emergency loan.

So the Federal Reserve will utterly be paid back by AIG. However, Richard S. Fuld Jr., the former chairman and chief executive officer of Lehman Brother, said that they did have the collateral and the capital, and should have been bailed out. He al so stated that Lehman was forced into failur! e not because it neglected to act responsibly or relent solutions to the crisis, but because of a decision, based on flawed information, not to provide Lehman with the support given to each of its competitors. (Lewis, 2010) Zakaria (2010) believes that the collapse of Lehman Brothers tale the political system into coming to the rescue, into recognizing that this was a huge, deep...If you want to consider a full essay, order it on our website: BestEssayCheap.com

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