The Fed and Lehman Brothers
by Laurence M. Ball
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Pub Date Jun 01 2018 | Archive Date Jul 25 2018
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Description
The bankruptcy of the investment bank Lehman Brothers was the pivotal event of the 2008 financial crisis and the Great Recession that followed. Ever since the bankruptcy, there has been heated debate about why the Federal Reserve did not rescue Lehman in the same way it rescued other financial institutions, such as Bear Stearns and AIG. The Fed's leaders from that time, especially former Chairman Ben Bernanke, have strongly asserted that they lacked the legal authority to save Lehman because it did not have adequate collateral for the loan it needed to survive. Based on a meticulous four-year study of the Lehman case, The Fed and Lehman Brothers debunks the official narrative of the crisis. It shows that in reality, the Fed could have rescued Lehman but officials chose not to because of political pressures and because they underestimated the damage that the bankruptcy would do to the economy. The compelling story of the Lehman collapse will interest anyone who cares about what caused the financial crisis, whether the leaders of the Federal Reserve have given accurate accounts of their actions, and how the Fed can prevent future financial disasters.
Advance Praise
Laurence M. Ball has produced a brilliant and riveting study of the most important moment of modern financial history: the failure of Lehman Brothers in September 2008. In a remarkably detailed and careful analysis Ball argues that decisions were driven by politics rather than sound policy. In short, this is a must-read masterpiece of financial and historical analysis.
Jeffrey Sachs - University Professor, Columbia University, New York
Government failure to rescue Lehman Brothers investment bank, and its bankruptcy in September 2008, precipitated a monumental financial crisis. Laurence M. Ball combs through a mass of documents, and presents a new and quite disturbing perspective on the events. Some may disagree with his take, but it is a milestone in the historical analysis of the crisis.
Andrei Shleifer - Professor of Economics, Harvard University, Massachusetts
A monumental piece of scholarship that is essential for understanding the financial crisis of 2008 - and the Great Recession that followed. Meticulous, gripping, and compelling.
David Romer - Herman Royer Professor of Political Economy, University of California, Berkeley
With unprecedented and exciting investigative research, Laurence M. Ball convincingly puts forth an important new view of the financial crisis, uncovering fundamental inconsistencies in the government’s often-told story of its role in the Lehman Brothers bankruptcy and the panic of 2008. He shows that the Fed could have legally prevented the bankruptcy, but didn’t do so either because of political concerns or a botched implementation of its game plan.
John B. Taylor - Mary and Robert Raymond Professor of Economics, Stanford University
The official narrative of any crisis is not always the most accurate. Professor Laurence M. Ball’s authoritative account of Lehman’s demise debunks the Fed’s narrative of the calamity and raises uncomfortable questions about the Fed’s inconsistent use of its discretionary authority. This captivating book should be required reading for anyone with a stake in preventing the next financial collapse. Athanasios Orphanides - Professor of the Practice of Global Economics and Management, Massachusetts Institute of Technology
Available Editions
| EDITION | Paperback |
| ISBN | 9781108420969 |
| PRICE | $22.99 (USD) |
Featured Reviews
Cristie U, Book Trade Professional
Laurence M. Ball has written a phenomenal summary of the most important moment of modern financial history: the failure of Lehman Brothers in September 2008. The author provides evidence that important decisions were made due to politics and the fallout from that.
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