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Fri 09 Sep 2008Federal Reserve was right not to save Lehman Brothers
SERIOUS MONEY:AMERICA’S AILING financial system was shaken to its core at the weekend as actions by the Federal Reserve and the US treasury demonstrated that the authorities would not backstop beleaguered institutions on demand.
The rescue of Bear Stearns, orchestrated by the Fed in March, alongside the quasi-nationalisation of Fannie Mae and Freddie Mac last week created the impression that the authorities would backstop any financial institution of sufficient size that might falter.
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