Paulson Drew The Line At Lehman Brothers, Sparked Frantic End

One of the most tumultuous weekends in Wall Street's history began Friday, when federal officials decided to deliver a sobering message to the captains of finance: There would be no government bailout of Lehman Brothers Holdings Inc.

Officials wanted to prepare the market for the possibility that Lehman could simply fail. The best way to do that in an orderly way would be to get everyone together in a room.

Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and his top New York lieutenant, Timothy Geithner, summoned some 30 Wall Street executives for a 6 p.m. Friday meeting at the Fed's offices in Lower Manhattan.

Read the full story here

-OR-

Related:

::The Government Stood Firm... Was It The Right Call?
::Next Question: Will The Government Help AIG?

Comments

[frenchie25]

Read the NY Times best seller "The Shock Doctrine" by Naomi Klein.

Then this will all make sense.

www.naomiklein.org

[yuppy70]

5 questions for Paulson & Bush:

- why is the US not doing the same as Britain and stopping short selling instead of trying to bankrupt the US and taxpayers??

- why is the NYAG doing Paulson's job?

- Is there a reason why the White House does not want to stop short selling or investigage who the short sellers are??

- why is the SEC chief still employed - he is either aiding or abetting short sellers or just plain stupid - either way he should be a clerk in a post office, not SEC chief.

- why is the government trying to bail out the mortgage mess (RTC or not) over and above taking over fannie and freddie?

[Rule Of Law]

Paulson, former Goldman-Sachs honcho, giving them yet another gift in their race to solidify their power in America and the world! "One Banker, under god, indivisible, etc etc etc..."

[mjtaylor22]

Yes, this is a case of all that electronic debt moving from place to place, sold then resold. Now that somone actually has to pay the bill........these fools want a bailout. with my tax dollars..no way
Convinced Americans the housing bubble was never gonna come, revamped mortgage backed securities to everyone's detriment.....with subprime mortgages that even the banks would not hold.....
that is where they blew it...the banks did not have to report the mortgages they were making because they were and are being packaged and resold as investments.......they used the Enron Loophole to finance bad debt and sell it off without it ever affecting their books. This debt got sold and resold and sold again, all the while our citizens were getting laid off their jobs and prices on everything from water to milk saw their prices spike...out of control.....Well guess what, now consumers do not have money to consume, they do not have jobs to go to either, as plants close down, wall street lays of 64,000 this year, airlines lay of f pilots making 150k pls per year,..I mean it is not hard to tell why and how we got into this terrible situation. Free Market De regulation RNC Policy

[mjtaylor22]

NO MORE BAILOUTS FOR CORP, NOT MY TAX DOLLARS, THEY GOT CAUGHT IN THEIR OWN GAME OF DE REGULATED TRADES, SO F-U......
FNMA WAS A NECESSITY, IT AFFECTS CITIZENS AND THE SECONDARY MARKETS,
BEAR STEARNS, I REALLY THINK SHOULD NOW BE A GOVT AND TAX PAYER OWNED CORP BUMP THAT, THEY DEFRAUDED MILLIONS OF AMERICANS OUT OF BILLIONS OF DOLLARS
AND LOST IT ALL....................EVEN JAIL IS TOO KIND FOR THESE FOOLS.
THE HOUSING BILL THAT STRUGGLED TO GET PASSED AND WAS FOUGH AGAINST BY THE RNC...GOT STRIPPED DOWN TO ONLY HLP ABOUT 400K PEOPLE, EVEN THOUGH OVER 8 MILLION ARE IN FORECLOSURE...
YEA NO MORE CORP BAIL OUTS..

[Tommygun264]

Could it really be the beginning of the end of Corporate Welfare as we know it? Will the wealthy actually have to play by the same rules as we little people?

[GJMandinka]

Not really. There has been a long-time rivalry between Lehman and Goldman Sachs. Hank Paulsen was CEO of Goldman Sachs before he took his current job. Big surprise that he decided to "draw the line" at Lehman. Anybody know what the government did for B of A so they could buy Merrill? I'll bet there was a no-interest loan or a quiet, government agreement to assume the bad debt-a la Bear Stearns.
If JP Morgan goes on the block, you can bet Paulsen will fire up the US printing press again. Socializing corporate debt is perfectly acceptable. It's just wrong to give a hand to an individual citizen...that doesn't own a mercedes.
Anybody finally getting the sense that all the negative publicity about government assistance programs were just a shallow ploy to use our American, sense of self-reliance against us? You know, get us to reject the programs that give ordinary citizens a safety net, paid for by taxing the wealthy, with manufactured moral outrage towards the weakest members of society. Government handouts don't bother these folks--just as long as they are going to the right people.

[Sundialsvc4]

It was a dumb thing to do, and here's why ...

The United States of America issues about $1 million in new "money" every minute around the clock. And then it multiplies even that amount by many times through more secondary borrowing.

None of that "money" is in any way linked to an actual asset. Actual production. Actual... anything at all.

Which means that ultimately "either the guv'mint or no-one" must ultimately be responsible for the debt. Or it will be --regarded as-- "worthless." The guv-mint has already dug this hole in the water and it has no choice now but to keep pumping it out.

If you want the Great Depression of 2008 to start yet this week, you're well on your way.

[koyak23]

The cruel irony is that McCain's economic advisor, Phil Gramm, is one of the architects of this debacle...

[kellygrrrl]

we ran out of money long ago

the debt we are leaving our children and grandchildren in Cruel and Criminal

at this point, there is no choice, let 'em fail

and all the Righteous Indignant Stubborn People of America can go vote Republican

[ErnestineBass]

You omitted Stupid, kg. 8-D