Now that Hank “St. Bernard” Paulson has rescued Citicorp from a fate worse than death, speculation has inevitably revived about how come Lehman Brothers was allowed to fail. A CNNMoney blog points out:

Treasury Secretary Hank Paulson was asked this very question in a Q&A that ran in yesterday’s Wall Street Journal, and he replied, “We didn’t have an option.” He said that Lehman had neither a buyer, as Bear Stearns did in JPMorgan Chase (JPM), nor adequate assets to justify a life-saving federal loan.

That’s his version, and no doubt he will stick to it as fervently as he preached the proposition for months that the worst was behind us, and that as far as the future was concerned, all was for the best in the best of all possible economies.

My personal opinion, though, is that it just hadn’t occurred to Paulson and his advisers and string-pullers yet that they could actually get away with stuff like the AIG and Citicorp rescues and the so-called $700 billion bailout plan.