> It would have created very bad problems with TBTF
That's one of the reasons that both Paulson and Bernanke cite for not bailing out Lehman.
Technically the government can bail out whoever they want for whatever amount they want. Bernanke isn't dumb - he knows this. He is saying that the bailout was impossible from a cost-benefit perspective. Setting a TBTF precedent so early on and putting the garbage debt-profile of Lehman's underlying assets on the government's balance sheet were too risky to justify bailing the bank out.
I'm also willing to reserve judgement until I read the full book rather than a few quotes picked out by the NYT.
That's one of the reasons that both Paulson and Bernanke cite for not bailing out Lehman.
Technically the government can bail out whoever they want for whatever amount they want. Bernanke isn't dumb - he knows this. He is saying that the bailout was impossible from a cost-benefit perspective. Setting a TBTF precedent so early on and putting the garbage debt-profile of Lehman's underlying assets on the government's balance sheet were too risky to justify bailing the bank out.
I'm also willing to reserve judgement until I read the full book rather than a few quotes picked out by the NYT.