Did Bernarke have a significant role in the Lehman Bankruptcy?

[Aemilius Paulus]

I'm fairly sure that Federal Reserve is authorized to provide emergency loans in extraordinary situations that threaten the entire banking sector. Thus, I would also blame this on the chair, Bernanke.

Do you know this more specifically?

That is kinda the idea of the Chairman of the Fed, but my prof seemed to be very sure of himself for some reason . Also, oddly enough, it seemed to me as if my mention of Bernanke's involvement struck a raw nerve in him. Seriously, the other presentations had numerous factual errors, and he pointed those out, saying "it's okay because this is just an introductory econ course and I expect you to make such mistakes when confronted by various conflicting sources" but when he came to our presentation, he vehemently disagreed.

Later, in the comments section of our score, he commented "such presentations in the style of disk-jockeying are not welcomed" - supposedly referring to the view that my comments on Bernanke were an opinion - despite that everyone else had opinions. He gave us exactly a 90 though. Out of a hundred... I have no idea what he gave to the others... I worked my rear off reading the two lengthy books in less than a week, then writing pages of analysis. No one did nearly as much. But I swear, I touched on a sensitive spot there. But how and why?

Talk about being lost... And I have very good relations with him. I was always the most active and interested student in the class... Go figure...

EDIT:

Heh, AP, I argued the same thing last fall days after the **** really started hitting the fan.

Good to see some consensus

[Ice]

Do you know this more specifically?

That is kinda the idea of the Chairman of the Fed, but my prof seemed to be very sure of himself for some reason . Also, oddly enough, it seemed to me as if my mention of Bernanke's involvement struck a raw nerve in him. Seriously, the other presentations had numerous factual errors, and he pointed those out, saying "it's okay because this is just an introductory econ course and I expect you to make such mistakes when confronted by various conflicting sources" but when he came to our presentation, he vehemently disagreed.

Later, in the comments section of our score, he commented "such presentations in the style of disk-jockeying are not welcomed" - supposedly referring to the view that my comments on Bernanke were an opinion - despite that everyone else had opinions. He gave us exactly a 90 though. Out of a hundred... I have no idea what he gave to the others... I worked my rear off reading the two lengthy books in less than a week, then writing pages of analysis. No one did nearly as much. But I swear, I touched on a sensitive spot there. But how and why?

Talk about being lost... And I have very good relations with him. I was always the most active and interested student in the class... Go figure...

EDIT:
Good to see some consensus

Your prof sounds like a dick. I could casually have these conversations with my Money and Banking professor in his office hours and he'd be more than happy to hear what I had to say.

I'm not sure exactly what he's referring to. I've failed to find the language that allows them to give emergency loans, but I remember it something really vague like I wrote above and it was a depression era clause in some financial regulation act. Sorry I'm being vague here, but I honestly can't find it.

Bernanke was heavily involved in the initial fiasco by using his powers (feds actually) to prop up these institutions with "emergency loans". He played more of an advisory role in the coordinated bailout which was passed by Congress.

edit:
Here you go

Section (13) (3) of the federal reserve act:

3. Discounts for Individuals, Partnerships, and Corporations
In unusual and exigent circumstances, the Board of Governors of the Federal Reserve System, by the affirmative vote of not less than five members, may authorize any Federal reserve bank, during such periods as the said board may determine, at rates established in accordance with the provisions of section 14, subdivision (d), of this Act, to discount for any individual, partnership, or corporation, notes, drafts, and bills of exchange when such notes, drafts, and bills of exchange are indorsed or otherwise secured to the satisfaction of the Federal Reserve bank: Provided, That before discounting any such note, draft, or bill of exchange for an individual, partnership, or corporation the Federal reserve bank shall obtain evidence that such individual, partnership, or corporation is unable to secure adequate credit accommodations from other banking institutions. All such discounts for individuals, partnerships, or corporations shall be subject to such limitations, restrictions, and regulations as the Board of Governors of the Federal Reserve System may prescribe.

http://www.federalreserve.gov/aboutthefed/section13.htm

Also

WASHINGTON, Dec 4 - The U.S. Federal Reserve is expected to send a letter to a key lawmaker on Friday explaining that it must obtain sufficient collateral under law to make any emergency loans, a source familiar with the letter said on Thursday.

The letter is a response to a request from Democrat Christopher Dodd, chairman of the Senate Banking Committee, who sought clarification of the Fed's powers under a clause of the Federal Reserve Act that the U.S. central bank has repeatedly invoked this year to provide emergency funding to a range of financial institutions buffeted by the financial crisis.

The possibility of Fed loans to U.S. carmakers arose during a committee hearing earlier on Thursday about Detroit's request for $34 billion in federal aid.

Lawmakers at the hearing asked why the Fed could not loan money to help General Motors and Chrysler , which have said they urgently need a cash infusion. Ford Motor is asking for a line of credit from the federal government.

The Fed has provided hundreds of billions of dollars to banks and other financial institutions against a wide range of collateral including U.S. Treasury securities and debt securities issued by mortgage finance enterprises.

Unlike those financial institutions, it appears unlikely that U.S. automakers would be able to post enough collateral.

http://news.alibaba.com/article/deta...oan-power.html

Hope this helps

[Aemilius Paulus]

Ahh, thank you so much, Ice, that was as good as I can possibly expect

Your prof sounds like a dick.

Hehe, a bit harsh, but you see, the problem is, he is not. Which is why I was upset by the comments, which came from a usually nice professor (although many students dislike him for picking randomly on people to answer his questions, which usually embarrasses the students because they do not know the answers - due to the fact he asks the questions about the chapters we have yet to study)

Like I said, I seemed to have stumbled onto something special - he was nice to all the other groups

Anyway, thanks again, Ice.

[Ice]

Ahh, thank you so much, Ice, that was as good as I can possibly expect :

My pleasure... Let me know if you need imput/articles/research on anything accounting/finance/economics related. I usually can help to limited extent.

Hehe, a bit harsh, but you see, the problem is, he is not. Which is why I was upset by the comments, which came from a usually nice professor [I](although many students dislike him for picking randomly on people to answer his questions, which usually embarrasses the students because they do not know the answers - due to the fact he asks the questions about the chapters we have yet to study)

The CPA I have for auditing does that a lot. Learning from failure helps a lot though.