Ben Bernanke, Hank Paulson, and Timothy Geithner have repeatedly stated that they wanted to save Lehman Brothers but couldn't do so legally because Lehman didn't have enough collateral.

Laurence Ball says that this is not true and was something they made up weeks after the Lehman bankruptcy (2016 paper, 2018 book). From the paper:

The people in charge in 2008, from Ben Bernanke on down, have said repeatedly that they wanted to save Lehman, but could not do so because they lacked the legal authority. ...

There is a substantial record of policymakers' deliberations before the bankruptcy, and it contains no evidence that they examined the adequacy of Lehman's collateral, or that legal barriers deterred them from assisting the firm. ...

If legal constraints do not explain the non-rescue of Lehman, then what does? The available evidence supports the theories that political considerations were important, and that policymakers did not fully anticipate the damage from the bankruptcy.

Quote from MarketWatch interview of Ball (2018):

what irks me is that they have not owned up at all to any kind of mistake and they've invented this alternative history of what happened on the Lehman weekend that just isn't accurate.

Slate interview (2018):

what irks me is that they have just dug in their heels and insisted. They've just said the same thing over and over, more and more insistently. That we knew it was going to be a calamity for Lehman to fail. We absolutely did everything we possibly could do. It was simply illegal and we didn't want to break the law, so with great sorrow, as Bernanke put it at one point, we realized Lehman had to fail. That is what these days is called an alternative fact. And that's just not the way it happened.

Have Bernanke/Paulson/Geithner ever responded to Ball's accusations? Specifically, have they ever addressed the arguments made in Ball's paper/book?


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