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The financial turkeys of the year

Allan Sloan is a senior editor-at-large at Fortune

TEXT OF INTERVIEW

Scott Jagow: Today, Mr. Sloan gives out his turkeys of the year awards. And man, there've been a lot of turkeys this year. Topping the list is the government letting Lehman Brothers fail. Allan, why is that the biggest turkey?

Allan Sloan: Because letting Lehman fail set off a whole batch of problems that nobody, I have to say including me, anticipated. It messed up the markets, it led to a money market fund breaking the buck. It started runs of hedge funds moving their money. At it set off this horrible mess that is still continuing. That's why I have given it not only the turkey of the year award, but very likely the turkey of the decade, since there are only two years left of the decade.

Jagow: All right, so another one on your list is this very recent Treasury flip-flop and the fact that the troubled asset relief fund is no longer about troubled assets.

Sloan: Even though it might have been the right thing to do, the Treasury yelled and the Fed yelled and screamed and said "We have to do this or Western civilization is at stake." So then they start to do it and then they say "never mind." So that sort of undermines faith in the people running the system, and that's a very bad thing. And we're seeing fallout from that now, because when Hank Paulson -- who I think is a reasonably formidable guy, the Treasury Secretary, he gets up, no one seems to pay any attention anymore. And Ben Bernanke at the Fed -- people worshipped the defeat of Alan Greenspan, I'm not sure why, but Bernanke says stuff and it's ignored.

Jagow: But bottom line, Allan, do you think that switching course was actually the right decision?

Sloan: Yes. And the problem there was they should have thought things out before they announced their plan. It's clear they didn't.

Jagow: Beyond the financial crisis, you have a couple of other turkeys on your list, one of them being Yahoo spurning Microsoft. Should Yahoo have taken the first offer from Microsoft?

Sloan: So it would appear. Before Microsoft made the offer, the stock was something like $19. Then it ran up to $30 or $31 or something like that. And now, it's something like $10. And you might say, well that's happened to the whole market. The thing is, if they had said yes, they'd have $31 of cash and they wouldn't have to worry about the whole market. But as they say, that's life in the big city.

Jagow: All right, Allan Sloan from Fortune Magazine. Happy Thanksgiving!

Sloan: And may the turkeys in your portfolio be smaller next year.

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