The reluctance of the Federal Reserve to lend to Lehman contrasts with its actions regarding Bear Stearns and A.I.G. The difference is that in the other two cas

The reluctance of the Federal Reserve to lend to Lehman contrasts with its actions regarding Bear Stearns and A.I.G. The difference is that in the other two cases, the Fed saw itself as lending against reasonable collateral. See my comment below for further explanation. Of course, at the end of the day it's all somewhat arbitrary - the Fed was just placing (decently-educated) bets on risk-laden firms: "Hmmm...this bank is probably too important for us to let it fail, this one might pay us back if we pump money into it, this one looks rotten, if we let this one fail now it might trigger a death spiral..."