What were the Fed, SEC, and Treasury thinking when they asked Merrill Lynch to help bail out Lehman? Merrill knew they were next on the list of the short sellers if a Lehman deal was reached.
How secret was it that Merrill was nearing a deal with BofA at the same time that BofA was supposedly negotiating with Lehman and Merrill was a key player in the success or failure of these negotiations?
The media and certain members of Congress were clamoring for the Government to let Lehman fail. Secretary Paulson's brother Richard works at Lehman Brothers. Did this relationship and the potential conflict of interest and political fallout effect the ultimate outcome?
The Government could have tailored a backstop that could have prevented a Lehman bankruptcy and saved some equity of the 26,000 employees of Lehman. In the end it was Merrill and it's shareholders who were thrown a lifeline.