Lehman Brothers and Government Interventions

The episode discusses the significant fallout from poor mortgage investments leading to the liquidation of Lehman Brothers, which had a major impact on the financial landscape. It highlights the federal government's intervention by providing an $85 billion loan to American International Group (AIG) to stabilize the financial system. This intervention is viewed as a necessary step in response to a housing crisis that threatened other financial giants like Fannie Mae and Freddie Mac. Such actions by the government raised concerns about the efficacy of monetary policy and the Federal Reserve's oversight during a critical time.