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Lehman creditors, you didn’t lose any money

You read that right. Peter Wallison, a senior fellow at the American Enterprise Institute, a right-leaning think tank, doesn’t think Lehman’s collapse caused any “substantial losses.”

In an op-ed in The Wall Street Journal, Wallison, in criticizing the Obama administration’s financial regulatory overhaul plan, concludes that the only reason Lehman’s bankruptcy caused so much market turmoil is because no one thought the federal government would allow it to fail.

Now there is some truth to that sentiment. But it’s also true that Lehman’s collapse was such a shock to the market because it revealed just how dangerously interconnected our global banking system is and the inability of regulators to do much about it.

But i don’t really want to critique Wallison’s argument about whether “too big to fail” institutions should be allowed to fail or not. What really got me was his astonishing claim that the losses directly tied to Lehman weren’t substantial. How’s that?