Letting Go of Lehman Brothers’
Ezekiel Hagans
Oklahoma Wesleyan University
International Finance
September 15, 2013

The United States and the rest of the world are in a time of economic uncertainty; in fact it has been for several years. One of the major events that led to this uncertainty took place exactly one year ago, when a credit firm called Lehman Brothers filed for bankruptcy (Eiteman, Stonehill, Moffett, 2013). At the time many assumed that the company was simple too big to fail, not that it couldn’t file for bankruptcy, but that the government would not allow for this to occur. But many experts and analysts were wrong, as Lehman brothers did in fact fail, which some believe led to the global credit crisis (Eiteman, Stonehill, Moffett, 2013). The following is a short look at whether or not the government treated Lehman Brothers unfairly, how moral hazard could be could be caused by government interference, and whether or not Lehman Brothers should have or should have not been allowed to fail.
Was Lehman Brothers treated differently than other financial institutions?
During the time that Lehman Brothers come to the forefront of financial turmoil, there were many other companies that were experiencing similar problems as well. Perhaps the most notable government bailout before Lehman’s bankruptcy filing was that of Fannie Mae and Freddie Mac. The United States government bailed out both companies, which put the government into a receivership position and set a new precedent (Miga, 2013). Furthermore after Lehman Brothers filed for bankruptcy, the government offered AIG an $85 billion loan package to help the company stay afloat providing more cause for concern regarding whether or not Lehman Brothers had been singled out (Eiteman, Stonehill, Moffett, 2013). This however may not be the entire story, as there were signs that pointed to the need for managers