On Sunday, September 14, we learned that Barclays could not proffer the needed guarantee without a shareholder vote. This vote would take days, if not weeks or months, and there was no way to predict if the shareholders would even vote for the transaction to proceed. I explored with counsel whether the U.K. government, or one of its instrumentalities like the FSA, might waive this U.K. requirement, such that the guarantee could be delivered and the rescue effected. I learned that the U.K. authorities were not amenable to a waiver. Thus, Barclays ceased to be available as the willing buyer that we needed to rescue Lehman, and there was no other interest from any firm of sufficient size and capability that could acquire Lehman, a company with consolidated assets of about $ billion. 5  Timothy F. Geithner, Secretary of the Treasury, Statement before the United States House of Representatives Committee on Financial Services, April 20, 2010. 4  BIS Review 112/2010  Many have asked why, when the Barclays guarantee problem presented itself, the Federal Reserve did not step forward and guarantee the trading obligations of Lehman pending its merger with Barclays. They observe that we lent approximately $ billion to Maiden Lane LLC to facilitate the merger of J.P. Morgan Chase and Bear Stearns, and they look at our commitment to lend up to $ billion to AIG.
With the introduction of the TSLF and the PDCF, the New York Fed sent small teams of two monitors into each of the four remaining investment banks, Goldman Sachs, Merrill Lynch, Morgan Stanley and Lehman Brothers – something it had never done before. Let me again emphasize that we were not intending to conduct supervisory activities with our personnel, nor were we attempting to displace the SEC, the primary regulator of the investment banks. To the contrary, we were acting as a potential lender to these potential borrowers, and we wanted to know our new borrowers better. Because of concern that our monitoring role could be misunderstood or misconstrued, Vice Chairman Donald Kohn described our objectives in public testimony. He said that the on-site monitors had two narrowly tailored goals: (1) to ensure that any credit that the Fed extended to the investment banks would be repaid, and (2) to ensure that the investment banks did not become too dependent upon Federal Reserve credit and would continue to work on improving their liquidity positions and financial strength. 2 The Federal Reserve monitors did not take on the broader responsibility of  1  Mary L. Schapiro, Chairman, U.S. Securities and Exchange Commission, Testimony Concerning the Lehman Brothers Examiner’s Report, before the United States House of Representatives Committee on Financial Services, April 20, 2010.