As the dust settles on Wall Street, details of the final frantic negotiations on Lehman Brothers reveal that Henry Paulson’s opposition to a government bailout ultimately sealed the investment bank’s fate, the Journal reports. Paulson summoned an emergency meeting of 30 Wall Street executives Friday to definitively state that taxpayer rescue wasn’t coming, and urged them to work on saving Lehman.
Paulson laid out a plan where the executives’ collective firms could buy Lehman’s “bad assets” while its stronger ones were sold to an independent buyer. But the execs were unwilling to bail a rival out, and lack of government backing deterred would-be bidders. “We've re-established ‘moral hazard,’” one source said of removing a government safety net that encouraged risk-taking. “Is that a good thing or a bad thing? We're about to find out.”