Perhaps the government should have saved Lehman Brothers. Business Week reports a stunning fact: Lehman Brothers' bankruptcy "threw into jeopardy derivative deals with a staggering 8,000 different firms that had paid Lehman billions of dollars in collateral." Now the court battles begin. The affected parties can be surprising. The list of affected parties includes big hedge funds like Harbinger Capital Partners and various Goldman Sachs funds. Big banks like Bank of America and small banks like the Federal Home Loan Bank of Atlanta were also affected. The basic issue is collateral. Companies put up collateral, which Lehman apparently used in ways that are still unclear. It seems to have disappeared. What's really scary is that this was standard industry practice.  

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