| Summary: | This research provides an analysis of whether the US government should have bailed out Lehman Brothers in the midst of the recent financial crisis. Both quantitative and qualitative factors have been analysed in order to bring together the numerous issues that surrounded the government’s monumental decision to allow Lehman Brothers to face bankruptcy. Comparisons have been made with other financial institutions who received financial support from the Federal Reserve to attempt to see if there was any outstanding rationale behind the decision.
Despite some fairly substantial evidence from my empirical analysis in favour of the government’s decision, the more important unquantifiable factors confirm that the government’s judgement may well have been misplaced over Lehman Brother’s collapse. Although as a company Lehman Brothers was fully deserving of their fate, the catastrophic events that followed, in particular the freezing of the credit markets, highlight just how great a mistake the government made.
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