Lehman is NOT too big to fail
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This is the message Paulson sent to the street this morning. In other words, Paulson was saying “speculators, you should know this coming in last 6 months, sorry but I can not help you out this time, because in doing so I could lose my job too”. Pauslon gave two reasons he won’t bail out Lehman Brothers: 1) Since the Bear Stearns crisis, Lehman has been in the news for almost 6 months, the partites should have taken steps in the case of “go under” of Lehman; 2) Since the Bear Stearns Crisis, Fed has opened the discount windows to investment banks. Lehman should have done its own job to raise capital, keep its house in order.
(Obviously, the reporters are not welcomed in the Lehman building)