Why didn the US Treasury save Lehman Brothers?
When Bear Stearns ran into trouble, the US Treasury made the terms favourable for JP Morgan Chase to buy it. And just last week, the US government effectively nationalised Fannie Mae and Freddie Mac, which between them own or guarantee about half of the $12 trillion US mortgage market. So already the US tax payer has been put at risk of shouldering the burden of billions of dollars of losses, and it is becoming politically less acceptable for the government to keep bailing out private companies. By not giving UK bank Barclays a guarantee for Lehman’s trading obligations as part of a deal to buy the business, analysts say the US Treasury has put a line under its willingness to use public money to rescue banks which have made wrong decisions. Instead, government officials have focused on supporting the financial system in other ways, announcing measures to ease access to emergency credit for struggling financial companies. How big is Lehman Brothers? Founded in 1850 by three immigrants f
