A common refrain heard from representatives of the Government is that Anglo Irish Bank had to be saved in September 2008, else it would have brought the entire banking system down with it. Government ministers consistently and still come on air to tell us that Anglo was systemically important and that we had to save it. Just look at Lehman Brothers, they say, look at the disaster Lehman caused.
Yes Lehman collapsed. Is the US better or worse off as a result, two years laters?
Ben Bernanke, the Fed chairman, has said something rather interesting in the context of Lehman:
“I regret not being more straightforward there because clearly that has supported the mistaken impression that, in fact, we could have done something. We could not have done anything.”
Bernanke told the Financial Crisis Inquiry Commission that any loan the Fed could have provided Lehman would not have stopped a run on the bank by customers.
“If we lent the money to Lehman,” Bernanke said, “we would have saddled the taxpayers with tens of billions of dollars in losses.”
So if the US government had saved Lehman, it would have saddled taxpayers with tens of billions of dollars in losses.
Except in Ireland, we did save our Lehman, leading to tens of billions of euros in losses for the taxpayer.
And what have we got to show for it?