FDIC Claims It Could Have Saved Lehman At Low Cost: Corollary Is Fed Broke Market Trust And Created Financial Crisis

From The American, published by American Enterprise Institute, "The Fed vs. the FDIC on Lehman’s Failure" by Peter J. Wallison commenting on the FDIC's article on how it could have saved Lehman:

the FDIC’s contention that Lehman’s creditors would have lost only three cents on the dollar again calls into question the U.S. government’s decision to let Lehman fail. Clearly, after Bear Stearns’s rescue, the financial markets were assuming that the United States would rescue all larger firms. This was confirmed by Anton Valukas’s report as an examiner for the U.S. bankruptcy court. Most market participants, he reported, including Lehman, could not imagine why the Fed would rescue Bear Stearns and not Lehman. When Lehman was allowed to fail, market participants realized that they did not know who would survive and who would not. A massive panic ensued as financial institutions hoarded cash.

Peter J. Wallison was a member of the Financial Crisis Inquiry Commission.