A Lehman Restitution Fund

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2 Responses

  1. Mike Guttentag says:

    Really? The government creates liability as it muddles through because it fails to realize the unintended consequences of letting Lehman fail. (Moreover, is an investment banker ever reasonably ever entitled to job protection, much less federally funded?)

    The problem you raise may be similar to the one created when the government bailed out the Bear Stearns debt holders, while trying to give the Bear Stearns equity holders virtually nothing, but count me as very cynical of the claim in this context.

  2. Miriam Baer says:

    Wouldn’t portfolio diversification be a partial answer to this problem, at least with regard to the shareholders? If you have a diversified portfolio, you might have lost money on Lehman at the beginning of this week, but (maybe) you made it back as a result of the government’s bailout at the end of the week.

    Of course, there is no such comfort if you are a (former) employee of one of these firms since you can’t diversify your labor. Nevertheless, I can’t imagine any political support for an employee “restitution fund” at this point.