Did a U.S.-U.K. mix-up kill Lehman?

A year after Lehman Brothers’ collapse sparked the financial meltdown, The Guardian revisits the implosion

The collapse of Lehman Brothers may have been aided by a “big game of chicken” between the U.S. and Britain, said John Carney in Clusterstock. According to The Guardian, British financial regulators were convinced that “when push came to shove,” the U.S. would backstop a proposed purchase of Lehman by Barclays. They were wrong, but it was a “reasonable enough” belief, given the U.S. rescues of Bear Stearns, Fannie Mae, and Freddie Mac.

The American explanation for not stepping in—that the U.S. Treasury didn’t have the legal authority—is suspect, said Felix Salmon in Reuters. But whatever the reason, once they decided not to save Lehman, U.S. regulators should have made that clear to their U.K. colleagues. If this “complete breakdown in communication” was behind the perfectly avoidable “chaotic Lehman bankruptcy,” somebody needs to apologize.

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