Lehman Was Solvent, Could Have Been Saved Say Fed Officials

A key moment that triggered the financial crisis, when Lehman Brothers was allowed to fail, is now being called into question.

The comfortable line of thought used by U.S. Treasury and Federal Reserve officials was that Lehman was insolvent and could not be saved.  The decision was a legal consideration, not a policy decision. Recent interviews published in The New York Times suggest otherwise.

The Fed explored all alternatives to avoid Lehman collapse

“We explored all available alternatives to avoid a collapse of Lehman, but the size of its losses were so great that they were unable to attract a buyer, and we were unable to lend on a scale that would save them,” Timothy Geithner, who was...