Lehman still a big issue

September 10, 2009 | By Jim Kim

Lehman Brothers, a full year after it imploded, is still a huge topic of conversation on Wall Street and in Washington, these days. Everyone's got an opinion: Some are glad the government let it die, others wonder why Lehman Brothers and not Bear Stearns? The reality is the government could have saved it, but it didn't, and the fallout was severe.

Goldman Sachs CEO Lloyd Blankfein raised an interesting issue at an event in Germany. He says that if Lehman Brothers had been bailed out, it might have led to a massive public backlash that would have forced the government to let the next tottering bank fail. "It might have been a much bigger one with much more dire consequences," he said, as reported by Bloomberg. I doubt that bank would have been Goldman Sachs, nor would it have been a consumer oriented bank like Bank of America or Citigroup, but perhaps Merrill Lynch would have been left to wither. We'll never know.

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