I like this Allan Sloan column in the Washington Post looking back at the worst “turkeys” of the year.
Topping them all is the Lehman Brothers, and Sloan admirably slaps himself for a bad call:
Letting Lehman Brothers go into bankruptcy in September is the turkey of the year, if not the decade, for the Federal Reserve and the Treasury Department. Lehman’s failure set off a round of market freeze-ups and panics that we’re still coping with. Among other things, it led to the Reserve Primary money market fund breaking the buck, which threatened a retail panic that forced the Fed and Treasury to intervene.
Plenty of people have been wrong about Lehman — including Lehman itself, which this year spent $761 million buying its own stock at an average price of $49.60. Recent price: 4 cents.
After letting Bear Stearns implode in March, the Fed seemed determined to protect Lehman. Players who thought the firm was safe ranged from Lehman chief executive Dick Fuld (who during the endgame kept holding out for better terms to raise capital that never came) … to yours truly (who wrote in June that “Lehman won’t fail”). Oh, well.
And unlike his colleague Steven Pearlstein, who let loose an embarrassing column lionizing Henry Paulson (and for that matter, his news counterparts who wrote a mystifyingly fawning two-piece profile of Hank) last week, Sloan slaps the Treasury Secretary around a bit:
Last fall Treasury Secretary Hank Paulson announced a superfund in which banks would combine to buy securities from “structured investment vehicles” they had left off their balance sheets. Amid a lack of interest, the superfund was canceled. Next came the $700 billion Troubled Asset Relief Program, which has now decided not to buy troubled assets. Hello?
Spiking the superfund and not buying troubled assets seem like the right things to do. They’re on the turkey list because the government insisted it needed them to save the world, then walked away. That undermines public confidence, the most important asset the government has.
There’s more, including Zell’s buyout of Tribune and Harbinger’s disastrous investment in the New York Times Company.
I’m guessing there will be another blowup or three before the year’s out.
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