Ben Bernanke

In his latest memoir, The Courage to Act: A Memoir of a Crisis and Its Aftermath, former Federal Reserve Chairman Ben Bernanke claims that the lack of cooperation from congress exacerbated the Lehman Brothers bankruptcy problem. The Fed was legally bound from saving the Lehman Brothers. This was not the only thing that Mr. Bernanke thought disapprovingly of congress. He thought that politicians had behaved in a politically motivated fashion, largely noting the Government shutdown of 2013. He believes congressmen are responsible for doing their part – solving the problem through fiscal policy.

He has also revealed in his book that he had made a mistake by seeming uncertain about the Fed’s ability to save the Lehman Brothers. Mr. Bernanke and the Fed had already realized that it was impossible for the US to save the Lehman Brothers. At the time, Mr. Bernanke was worried that the confidence of the investor would be affected very negatively if the Fed revealed the inability to save Lehman Brothers or any other banks that must be saved in the future. However, his reservation to notify the public had created an illusion that the Fed let Lehman Brothers fail.

Lehman Brothers creditors had suffered about $200 billion of losses.

Source: NYTimes, Andrew Ross Sorkin, Binyamin Appelbaum