Laurence Ball | The Fed and Lehman Brothers

September 12, 2018

The bankruptcy of Lehman Brothers was the pivotal event of the 2008 financial crisis. Ever since the bankruptcy, there's been heated debate about why the Federal Reserve did not rescue Lehman in the same way it rescued other financial institutions. The Fed's leaders 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. In his new book, "The Fed and Lehman Brothers", Laurence Ball argues that the official narrative of the crisis is wrong; the Fed could have rescued Lehman but chose not to because of political pressures and an underestimation of the damage the bankruptcy would do to the economy. In this video, Mr. Ball, a professor of economics at Johns Hopkins, discusses insights from his book. Sponsored by the Global Financial Markets Center.