The U.S. government’s decision to take a hands-off approach with Lehman Brothers and let it reel sounded alarm for all other financial institutions to ward off risks instead of waiting for a bailout when dire predicament happens, analysts said.

A receptionist is seen through the doors of the Lehman Brothers offices in Bangkok on September 15, 2008. Employees of U.S. banks Lehman Brothers and Merrill Lynch in Asia struggled to come to terms on Monday with the speedy redrawing of Wall Street’s financial landscape, as Lehman filed for bankruptcy and Merrill was sold to Bank of America. (Xinhua/Reuters Photo)

Lehman ate up too much bad debt and unfortunately became the only fallen victim in this crisis so far, but it also taught others a lesson, Jia said.

Some analysts compared the financial crunch to a relay game in which the danger lies in a hidden fact that everyone was passing risks to the next — from lending banks to investment banks, from evaluation institutes to insurance companies.

When numerous house owners cannot afford the debt, the relay game came to a stop — the banks have to digest the depreciated real estates and the insurers also pay the toll, analysts said.

In an effort to stabilize the credit market and prevent a deeper economic downturn, the Bush administration is planning to buy 700 billion dollars of bad debt and encourage financial institutions to restore normal lending.

The sweeping cleanup plan will be the U.S. government’s largest financial bailout since the Great Depression.

“This is a big package, because it was a big program,” U.S. President George W. Bush said Saturday at a White House news conference.

“I will tell our citizens and continue to remind them that the risk of doing nothing far outweighs the risk of the package.”

U.S. Treasury Secretary Henry Paulson said the plan would address the root problems of the financial crisis gripping the country — bad debt on financial institutions’ balance sheet.

“As illiquid mortgage assets block the system, the clogging of our financial markets has the potential to have significant effects on our financial system and our economy,” Paulson said last week.

Critics say the U.S. government has been inconsistent in its reactions to market events.

Investment bank Bear Stearns was provided an emergency government loan this March. Mortgage giants Fannie Mae and Freddie Mac were bailed out on Sept. 7.

The fourth largest investment bank Lehman Brothers Holdings was left no choice but to go bankrupt on the night of Sept. 14. On the same day the third biggest investment bank Merrill Lynch was forced to sell itself to Bank of America in a rush deal.

Two days later, top U.S. insurer American International Group (AIG) narrowly obtained a last-minute deal of Fed’s 85-billion bridge loan to stay in business.

“I don’t think we can fault the Fed on working with Bear, Fannie and Freddie and AIG but not Lehman,” Ronald Schramm, a professor in finance and economics at Columbia University Graduate School of Business, told Xinhua.

“Lehman was neither too big nor too urgent to fail, so it was allowed to fail. Fannie and Freddy and AIG were too big to fail and Bear too urgent to fail — so they were salvaged,” wrote Schramm.

U.S. Congress was working through the weekend on the bailout plan and was expected to pass the proposal in a matter of days but with some additions to safeguard of the interests of U.S. taxpayers as many lawmakers indicated.

Meanwhile, the U.S. government was joining hands with other countries to tackle the crisis globally.

The U.S. Federal Reserve, the European Central Bank, the Swiss National Bank, the Bank of England, the Bank of Canada and the Bank of Japan Thursday pooled up to 247 billion U.S. dollars to rescue the plummeting stock market.

Analysts said the effectiveness of government intervention in the market remained unclear, but many lessons could surely be drawn from the financial storm.

VietNamNet/Xinhuanet