Universidad del Norte BE1 Business Portfolio 2 Anderson Gutierrez Garcia

September 23, 2009

Article Review: Nocera, Joe (2009, September 11). Lehman Had to Die So Global Finance

Could Live. The New York Times, Retrieved from http://www.nytimes.com/2009/09/12/business/12nocera.html?ref=businessspeci al4 SUMMARY This article reveals not only the bad decisions made during the beginning of the financial crisis but the background behind those decisions, and how whether they were the best or not, turned out to be the ones that had to be taken at that point. Then we start by analyzing the facts: Lehman Brothers, one of the most important American traditional banks, broke with no bailout opportunity from the Fed; instead, many other banks such as Goldman Sachs, Merrill Lynch and, the largest insurance company, American International Group received the support from Henry Paulson and Ben Bernanke, the treasury secretary and the Federal Reserve chairman at the time. Many commentators have stated that Lehmans bankruptcy turned the subprime crisis into a full-blown financial collapse. However, when you look at the situation even if Lehman had been saved, the collapse would have happened anyway; going even further we may say that if Lehman brothers had been rescued the situation could have turned out worse, in other words, Lehman Brothers death was necessary to save the rest of Wall Street. Despite the efforts made for Lehman Brothers to keep up, there were not chances to stay on the market, probably the road taken to leave Lehman brothers was unfair and even tragic for the employees of the company, regardless the political pressure in the congress and the lack of willingness from Fed to help out Lehman, without this wake-up call it had been to impossible to get the approval for the bill that aid with billions of dollars other greatest American companies like AIG, Merrill Lynch, Bank of America which bankruptcy had caused an irreparable damage to the American economy. In the end, we may say that Lehman was the unfortunate firm in the wrong place and time that had to die so global finance could live.