What transpired at the New York Fed offices that weekend?
We spent that weekend getting the top banks and Wall Street firms together. We had them come spend the weekend at the New York Fed. And we said to them, “Look, we’re going to figure out whether we can solve this. But because we’re not sure we can solve it, we’re going to make you work with us to figure out how we contain the damage.” We did not believe we could insulate them from the consequences of default by Lehman, because by then the force of the storm was so acute. We’d been living with an escalating crisis. What was your directive? We were looking at different options for solving Lehman but also how to put “foam on the runway” — figuring out how to contain the damage if we failed to find a solution. But the dominant reality was that a solution for Lehman would not be sufficient to contain the intensifying storm. Remember, Lehman was the symptom of how powerful this crisis was, not the cause or the precipitator. We were already in the midst of a run on other institutions. You rea
