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

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.

It’s understandable that nobody is eager to take the blame for Lehman’s collapse, said Kevin Drum in Mother Jones, and thus “the post-Lehman global financial meltdown.” But that’s why the Guardian story, with “absolutely no sourcing whatsoever” should be taken “with a grain of salt”—it’s the British side of an already “fishy” story.

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Sure, U.S. or British regulators, or any number of private banks, could have stepped in to save Lehman, said Steven Pearlstein in The Washington Post, but that would only have postponed the “Great Financial Meltdown.” In fact, it’s probably a good thing nobody intervened. It took Lehman’s implosion to shock us into action, and action saved us from “a second Great Depression.”