In light of all of the running and screaming that is going on on Wall Street I have a question that maybe someone can answer that has more knowledge of economics than I do (which would include most everyone). When the government sat down last weekend (and that’s another question, which member of the government make this decision?) and saw that Lehman Brothers, AIG, Meryll Lynch, and Fred’s Bank were all on the verge of collapse, how do they decide which ones to bail out and which ones to let collapse?
Is there a litmus test? Are there certain criteria that must be met before a company gets to survive? I’ve seen a lot of stories stating that this decision was made, but no one has said why one and not the other.
In my ignorance of this issue, I have this fear that the choice gets made because there is a relationship between the people running the ones who get saved and the people doing the saving. With no other information as to why, this is where my mind goes.
Can anyone confirm, or disconfirm this suspicion?