Principle and Practical Rationality During the Financial Crisis
Chapter 7: The collapse of Lehman Brothers and the rescue of AIG
This chapter analyses the government decision making and meaning related to the collapse of the investment bank Lehman Brothers in September 2008. We investigate the Lehman Brothers case for evidence of Pragmatist and principle-guided political crisis management. We find that strategic crisis leaders adopted a more principle-guided form of political crisis management in this case than they did in the Bear Stearns case. This is especially true when it comes to the two Pragmatist dimensions of anti-dualism and fallibilism that are largely absent in the Lehman example. While focusing on the Lehman case, we also contrast it with two other important decisions made only days later: the rescue of the insurance company AIG and the rescue of the money market mutual funds. These two decisions again illustrate a more Pragmatist form of political crisis management.
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