If only – reflections on Lehman Brothers

Niall Ferguson writes in the FT on the collapse of Lehman Brothers against the backdrop  of reviewing a new book on the topic.

He concludes:-

The real tragedy is that the failure of Lehman has left Wall Street’s survivors both bigger in relative terms and more secure politically. As long as the big banks feel confident that they can count on the government to bail them out – for who would now risk “another Lehman”? – they can more or less ignore calls for lower leverage and saner compensation.

If only we had learnt from Lehman that no bank should be “too big to fail”, we might still have a real capitalist system, instead of the state-guaranteed monstrosity that is the real legacy of last year’s crisis. If only.

He looks at a number possible scenarios which might have occurred and comes to the conclusion above.

In my view the article is worth a look.

There are issues here of financial supervision, as well as of governance. How and why did the Lehman board allow this disasterous mess to occur, the question might well be asked of other boards as well.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s