Eight years ago today Lehman Bros. filed for bankruptcy.
Everything that happen to the US economy since then can be attributed to that filing and its ramifications.
After Lehman failed, that was the last financial firm allowed to fail under capitalism. All other weak financial firms were forced into shot-gun marriages with larger firms in order to keep the ATMs working.
Too big to fail came into vogue in a move away from capitalism towards socialism and propping up crippled Wall Street banks so as to avoid another Lehman.
Four days after Lehman Bros., I was one of the first journalist to write on Washington’s massive intervention into the markets, which began the socialistic banking sector.
The article carried the headline: Almost Armageddon, with the lead saying:
“The market was 500 trades away from Armageddon on Thursday, traders inside two large custodial banks tell The Post.”
What would follow was to bring all the Wall Street CEOs together over that weekend and the next weekend at the New York Fed’s office down on Liberty St. in lower Manhattan to merge stronger banks like JPMorgan and Bank of America with weaker firms like Wachovia and Merrill Lynch.
In order for these shot-gun marriages to be consummated the stronger CEOs like Jamie Dimon extracted a pound of flesh from Treasury and the Federal Reserve with guarantees that Uncle Sam would prop up the banking system with cash to help the Lehman wounds to heal.
Unfortunately those wounds have not healed sufficiently in the last eight years and we still have ailing institutions being propped up by Federal Reserve actions even after all of the QE programs.
Capitalism only works if you are allowed to fail, Unfortunately on Wall Street that does not apply, still.