We'll be debating this for a long time: Would it have made any difference if Lehman Brothers had been "saved" by regulators the way they saved Bear Stearns? Would it have prevented additional carnage? It's tempting to say the regulators got it wrong by letting it fail. The extent to which Lehman was involved in the CDS market, which has rippled far and wide, would suggest that the company was "too important to fail," as was Bear Stearns. But one could easily argue that the CDS market machinery has absorbed the bankruptcy as well as it could have, and the government had to take a stand. It had to let someone fail. This is still capitalism, after all. Morgan Stanley, most likely, would have run into issues at some point, and Goldman Sachs would have converted anyway.

For more:
- here's an interesting look at the issue from Portfolio

Related Articles:
The death of Lehman Brothers
Lehman Brothers regulatory woes mount
Bear Stearns: A timeline of decline