Ben S Bernanke is the one who falsely insisted that Great Depression 2.0 was just around the corner in September 2008.
Along with Goldman’s plenipotentiary at the US Treasury, Hank Paulson, it was Bernanke who stampeded the entirety of Washington into tossing out the window the whole rule book of sound money, fiscal rectitude and free market discipline.
In fact, there was no extraordinary crisis.
The Lehman failure essentially triggered a self-contained leverage and liquidity bust in the canyons of Wall Street, and it would have burned out there had the Fed allowed money market interest rates to do their work.
That is, to rise sufficiently to force into liquidation the gambling houses like Lehman, Goldman and Morgan Stanley that had loaded their balance sheets with trillions of illiquid or long-duration assets and funded them with cheap overnight money.
There would have been no significant spillover effect.
The notions that the financial system was imploding into a black hole and that ATMs would have gone dark and money market funds failed are complete urban legends.
They were concocted by Wall Street to panic Washington into massive intervention to save their stocks and partnership shares.