As cut off from information as Fuld may have been, it wasn't as if he didn't recognize the firm's problems. In November 2004, more than two years before the bull market reached its peak, Fuld was telling people around him that low interest rates and cheap credit would create a bubble that could one day pop.

``It's paving the road with cheap tar,'' he told colleagues in a meeting at the time. ``When the weather changes, the potholes that were there will be deeper and uglier.''

For those who think the US Federal gubmint is caught on the sidelines of all this, rather than an integral part:

Meanwhile, worried that his lieutenants wouldn't be able to fetch a fair price from an investor, Fuld was pursuing another strategy. The plan his associates devised would offload Lehman's toxic commercial-mortgage portfolio to an independent company, codenamed Spinco. The new company's stock would be owned by Lehman shareholders, and its startup capital would be provided by the firm. While Lehman would have to raise fresh capital to replace what it transferred to Spinco, investors would be buying into an investment bank with a scrubbed balance sheet.

Management Shift

The U.S. Securities and Exchange Commission gave the plan initial approval, Lehman executives said. There was only one hitch: It would take at least three months to meet SEC requirements. Lehman didn't have three months.

Remembering that floundering investment banks like Goldman were allowed to become bank holding companies, check out this example:

He had approached Timothy F. Geithner, 47, president of the Federal Reserve Bank of New York, in July to see whether Lehman might become a bank-holding company, which would allow it to widen its funding base. Geithner was cool to the idea, according to a person familiar with the discussions, saying it wouldn't solve the problem of Lehman's troubled assets. Fuld never made a formal application.

Fed `Haircuts'

Now, Fuld went back to Geithner. With Lehman running out of cash -- it had only $1 billion left by week's end -- it had to borrow money from the Fed's broker-dealer facility by Monday if it wanted to stay in business. Again the New York Fed, on whose board Fuld sat until the day before, was of no help. He was told Lehman's assets didn't fit the criteria for collateral, Bernanke would later say. The Fed also raised its ``haircuts,'' or collateral requirements, a person familiar with the discussions said, making it harder for Lehman to borrow from the facility.

Note also that Mr. Geithner is one of the names floated for Sec Tres.

Obama gonna put a stop to this theft?  Here's how deep the interconnections run.

It was McDade who called Fuld from the Fed meeting on Sunday afternoon, not Paulson. Far from helping Lehman, Paulson, Geithner and other officials, including SEC Chairman Christopher Cox, began pressing Lehman to declare bankruptcy. McDade told them that would have serious repercussions for other firms. Wall Street executives gathered at the Fed said a bankruptcy wouldn't be the end of the world. Goldman Sachs and Morgan Stanley both had war rooms with charts detailing Lehman's subsidiaries and their exposure to each one, and they thought their potential losses would be limited.

I can't even summon the anger to keep writing, my mind is so boggled.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin