The last resort

摘要

Six months after the American government supported the sale of Bear Stearns to JPMorgan Chase, leading to the end of one of Wall Street's "Big Five", it tried to make it clear last weekend that there would be no further bail-outs, and let Lehman Brothers fail. Two days later, that line in the sand had all but blown away.rnThe Treasury's decision on September 16th to take over American International Group (AIG), one of the world's biggest insurers, in exchange for an $85 billion credit line from the Federal Reserve, was momentous. More so than allowing Lehman Brothers, which was even bigger than Bear Stearns, to go bust the day before; more so, even, than the takeover of Fannie Mae and Freddie Mac, the big mortgage agencies, just over a week before. With AIG, the stakes were higher for both the financial system and the authorities' credibility.rnFannie and Freddie always had implicit federal backing, so when they tottered, the federal government had little choice but to make that support explicit. Bear Stearns was a regulated investment bank whose demise was so sudden that its collapse could have caused a maelstrom.