...reporting for duty.
I would only ad "cui bono?" as a comment.
April 17 (Bloomberg) -- Federal Reserve Bank of San Francisco President Janet Yellen signaled that it was a mistake to allow Lehman Brothers Holdings Inc. to collapse, saying the firm was “too big to fail” and its bankruptcy caused a “quantum” jump in the magnitude of the financial crisis.
“I am told that Lehman had insufficient collateral” for the Fed to provide loans, Yellen said after a speech in New York yesterday. She noted that she was “sitting in California” at the time of the Fed deliberations and “wasn’t involved in anything having to do with it.”
Yellen’s remarks are the strongest to date by a Fed official blaming the Lehman failure for a worsening in the crisis. She echoed calls by Chairman Ben S. Bernanke for new powers for federal authorities to take over and resolve failing nonbank financial firms.
The San Francisco Fed chief, a chairman of former President Bill Clinton’s Council of Economic Advisers and ex Fed governor, also said she now sees a case for using Fed tools to prick asset bubbles to head off systemic crises.
The impact of Lehman’s failure “was devastating,” Yellen said yesterday. “That’s when this crisis took a quantum leap up in terms of seriousness.”