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In the latest from the ongoing investigation into the 2008 financial crisis, it turns out that politics may have doomed Lehman Brothers. According to the panel's chairman at Wednesday's hearing into the crisis, the decision to not bail out the beleaguered financial firm was a policy decision made by US officials.
The Democratic Chairman of the blue-ribbon panel said government officials made a "conscious policy decision" not to prevent Lehman Brothers Holdings' 2008 collapse and potentially accelerated the crisis.
It's a result that challenges the argument made by regulators that they had no legal authority to help.
The 10-member, congressionally-appointed commission is looking into the the causes of the financial crisis, and is due to issue a report to Congress by December 15th.
According to a commission document, the then-Treasury chief of staff, wrote in an email saying he couldn't stomach bailing out Lehman. He said it would look horrible to media.
Evidence like this lends support to former Lehman CEO Dick Fuld. He contends that the Federal Reserve and Treasury could have done more to prevent his firm's bankruptcy.
In his testimony on Wednesday, Fuld said Lehman was ordered by government regulators to file for bankruptcy. The government then was forced to intervene to protect other firms and the entire financial system.
The Commission will hear from Fed Chairman Ben Bernanke and the Federal Deposit Insurance Corporation Chairman on Thursday.
- Former Lehman CEO testifies before FCIC 2010-09-02