I’m sorry I missed this CNBC interview last week with Robert Wolf, chief of UBS Investment Bank in the U.S.  There’s a remarkably eye-opening sound bite.   (hat tip M. Mayer)

…there were no discussions on AIG during that three day period [the weekend Lehman failed].

Wait, really?  Does this mean the Fed had no idea AIG was about to collapse when it was working to resolve Lehman?  Two days later it threw $85 billion at them with completely insufficient security, a package that later expanded to $150 billion.

Clearly there needs to be some mechanism to receive the assets of failed systemically-important companies.  FDIC has its hands full with insured depository institutions.  It has no mandate, much less the capability to handle a behemoth like AIG.

But should we be giving more authority to the Fed to handle this?  There is a singular explanation for the financial bubble and ensuing collapse: leverage.  The Fed has ultimate control over leverage via the reserve requirements it is supposed to impose on banks.  Taken in by mathematicians whose models explained that leverage could be made riskless via complicated hedges, Greenspan/Bernanke/et al totally abdicated their responsibility to enforce sensible reserve requirements.

Yet Obama thinks they can handle a bigger book of business?