No intention of flaming away. I don’t think Bernanke made the right decision. And I don’t think Greenspan did years earlier (by allowing this to happen...too much evidence out there to suggest that he either encouraged these risks, looked the other away, or didn’t understand the devastation these “innovations” would bring).
But...I still don’t believe we are passed the worst. Too much bad debt (and other issues) out there.
And new information I’m seeing and reading about Lehman isn’t too good, either.
Congress for encouraging lenders to lend to people who had no business taking on a mortgage. They neither had enough money down, nor the ability to pay their debts
Lenders for being greedy
Borrowers who had no business doing this
Investment banks who did poor due dilligence
Bond insurers who never understood the risks properly
The commissioners of insurance in New York and Wisconsin (Ambac is domiciled in Wisconsin)
The rating agencies for not understanding the risks.....
All this led to the sub prime collapse. I hope to God we are past the worst, won't comment on Lehman, but stand firmly behind Bernanke. The sub prime mess spilled beyond commercial banks, investment banks and bond insurers. It ran all the way to the municipal markets where there were nearly a trillion dollars of bonds at risk of downgrades. The market needed the stability the Fed provided.
We're not out of the woods, but had they not acted to find a buyer for Bear, to open the discount window to certain investment banks and cut rates, I really wonder where we'd be right now.