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 FINANCIAL CRISIS INQUIRY COMMISSION REPORT

the FCIC. “There was a criticism of bailing out Wall Street. It was a combination of
political unwillingness to bail out Wall Street and a belief that there needed to be a
reinforcement of moral hazard. There was never a discussion about the legal ability
of the Fed to do this.” He noted, “There was never discussion to the best of my rec-
ollection that they couldn’t [bail out Lehman]. It was only that they wouldn’t.” 
Thain also told the FCIC that in his opinion, “allowing Lehman to go bankrupt
was the single biggest mistake of the whole financial crisis.” He wished that he and
the other Wall Street executives had tried harder to convince Paulson and Geithner
to prevent Lehman’s failure: “As I think about what I would do differently after that
weekend . . . is try to grab them and shake them that they can’t let this happen. . . .
They were not very much in the mood to listen. They were not willing to listen to the
idea that there had to be government support. . . . The group of us should have just
grabbed them and shaken them and said, ‘Look, you guys could not do this.’ But we
didn’t, and they were not willing to entertain that discussion.” 
FCIC staff asked Thain if he and the other executives explicitly said to Paulson,
Geithner, or anyone else, “You can’t let this happen.” Thain replied, “We didn’t do it
strongly enough. We said to them, ‘Look, this is going to be bad.’ But it wasn’t like,
‘No . . . you have to help.’” 
Another prominent member of that select group, JP Morgan’s Dimon, had a dif-
ferent view. He told the FCIC, “I didn’t think it was so bad. I hate to say that. . . . But I
[thought] it was almost the same if on Monday morning the government had saved
Lehman. . . . You still would have terrible things happen. . . . AIG was going to have
their problems that had nothing to do with Lehman. You were still going to have the
runs on the other banks and you were going to have absolute fear and panic in the
global markets. Whether Lehman itself got saved or not . . . the crisis would have un-
folded along a different path, but it probably would have unfolded.” 
Fed General Counsel Alvarez and New York Fed General Counsel Baxter told the
FCIC that there would have been questions either way. As Baxter put it, “I think that
if the Federal Reserve had lent to Lehman that Monday in a way that some people
think—without adequate collateral and without other security to ensure repay-
ment—this hearing and other hearings would have only been about how we wasted
the taxpayers’ money.” 