(p. B1) It is astonishing to hear a former Federal Reserve chairman acknowledge that he may have misled the public as part of an agreement with another senior government official about one of the most crucial moments in recent financial history — and that he now questions whether he should have “been more forthcoming.” But that is what Ben S. Bernanke says in his new memoir, “The Courage to Act: A Memoir of a Crisis and Its Aftermath.”
That crucial moment? The bankruptcy of Lehman Brothers. Mr. Bernanke, in perhaps the most candid explanation of Lehman’s 2008 collapse, writes that he and Henry M. Paulson, then the treasury secretary, purposely obfuscated when asked about Lehman’s demise early on, allowing a narrative to develop that the government had purposely let the firm fail.
“In congressional testimony immediately after Lehman’s collapse, Paulson and I were deliberately quite vague when discussing whether we could have saved Lehman,” Mr. Bernanke writes. “But we had agreed in advance to be vague because we were intensely concerned that acknowledging our inability to save Lehman would hurt market confidence and increase pressure on other vulnerable firms.”
. . .
(p. B4) He writes that it was simply impossible to save Lehman, pointing to the nearly $200 billion of losses that Lehman’s creditors have since suffered. No one has come forward on the record, nor has any contemporaneous document been produced in the past seven years that said the government had found a way to save the company and specifically chose not to do so for political reasons, a point Mr. Bernanke alludes to in his book. “I do not want the notion that Lehman’s failure could have been avoided, and that its failure was consequently a policy choice, to become the received wisdom, for the simple reason that it is not true,” he writes. “We did everything we could think of to avoid it.”
For the full commentary, see:
Sorkin, Andrew Ross. “In Bernanke’s Memoir, a Candid Look at Lehman.” The New York Times (Tues., OCT. 6, 2015): B1 & B4.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date OCT. 5, 2015, and has the title “In Ben Bernanke’s Memoir, a Candid Look at Lehman Brothers’ Collapse.”)
The Bernanke memoir is:
Bernanke, Ben S. The Courage to Act: A Memoir of a Crisis and Its Aftermath. New York: W. W. Norton & Co., 2015.