We think this article in the Washington Post probably represents an accurate picture of the thinking in…er…Washington:
US Helps Lehman Go Up for Sale
Some highlights:
The government is looking for an agreement that would not involve public money. One scenario that is emerging includes multiple suitors acquiring different pieces of the venerable investment bank, which has suffered staggering losses from its bets on real estate and mortgages…
Fed leaders do not want to provide financial backing for an acquisition of Lehman, as the Fed did for Bear Stearns. The government’s plans also stop far short of the full takeover that occurred with Fannie Mae and Freddie Mac. The Fed, which has faced criticism for its efforts to rescue large financial firms, does not want the markets to view it as an endless source of bailouts. But even helping engineer a buyout amounts to a form of government intervention…
As Brian Sack, from Macroeconomic Advisers, told the Post:
There’s a list of troubled institutions that may require assistance, and the question is, is the list very short, and have we dealt with the majority of the problems, or are we just beginning?.. The Fed can only do so much.
Which would seem to be the moot point here. As Fintag notes:
On Monday Paulson added another USD100bn to the US deficit to make it USD600bn with the F&F plan and this weekend the bailout of WaMu and Lehman will add another few billion to the pot. And so the American taxpayer watches helplessly whereas McCain and Obama watch in horror knowing they are going to have to fund this large debt in times of recession. By putting taxes up or watching the dollar collapse and OPEC responding by restricting oil production etc etc.
And the Dow jumped 160 points on the news. Bizarre.