Many US companies have stuck in the ongoing financial crisis, but not all of them have been treated equally.

Mortgage giants Fannie Mae and Freddie Mac were bailed out on September 7;

The fourth largest investment bank Lehman Brothers Holdings was left no choice but to go bankruptcy on the night of September 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 US insurer American International Group (AIG) narrowly obtained a last-minute deal of Fed's 85-billion bridge loan to stay in business.

The list, which could be lengthened, showed that companies bogged down in the financial crisis have been treated differently.

"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, wrote in a note to Xinhua.

Bear Stearns is an investment bank in the Wall Street.

"The first three all suffered as well with shareholders getting wiped-out and management fired – so bailout is not quite the correct word," wrote Schramm. "Secondly, 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."

But efficient and clear-minded leaders alone can never be the ultimate solution.

"There will need to be a framework developed for handling the bad loans," Schramm said, adding "That framework is not yet in place and with administrations changing hands it may be delayed. The longer the delay, the more difficult the problem."

Dr. Ken DeWoskin, senior vice president of the Knowledge Management at US Conference Board, contends that the crisis shows the banking system was deregulated too far.

"Certainly there will be new bank regulations," DeWoskin told Xinhua,"(But) we will have to wait to see the outcome of the US election to know how tough the regulations sought by Congress and the White House will be."

The shockwaves of this "Hurricane Wall Street" could not wait to spread before the new regulation coming into place. Sharp losses on major indexes worldwide and shooting unemployment numbers are just the tip of the iceberg.

"The fiscal impact of these bailouts could be large, and could lead to a weaker dollar and even in a worse case a higher risk premium on US assets," Schramm said.

Fortunately, there are some lessons to remember before it is too late.

Schramm believes that Fannie Mae and Freddy Mac had a corrosive effect across US financial markets by allowing for too easy finance for housing, which was echoed by DeWoskin.

"Banks engaged in 'financial innovation' without control of the products they were selling and they did not disclose the terms fully to borrowers," said DeWoskin, "Then they securitized these assets at prices that did not reflect the real level of risk. For a short while, they produced very high returns and enabled American homeowners to spend money faster than their real income was growing."

To tackle the issue, Schramm believes one thing to avoid is to mix a social-political mandate, e.g. housing for all Americans, with the financial system because it always wreaks havoc.

"Rather use tax policy to affect social goals – it is more transparent. Regulation will never be a substitute for good policies and reasonable institutions. We will have to strike a more nuanced and balanced approach to financial market regulation," Schramm suggested.

It seems the investors got a moment of relief they desperately longed for on Thursday as more efforts were offered to keep the ongoing financial crisis from worsening.

So far the world's top central banks have injected multibillions US dollars into the global markets, and Dow Jones index gained 410 points Thursday.

(Xinhua News Agency September 22, 2008)