Lehman Brothers’ presidential connections

Now that the government has agreed to rescue Citigroup (C), investors are pondering again a question that never seems to die: Wasn’t it a mistake to let Lehman Brothers fail? 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.

There’s a certain irony here. Did you know that Lehman had incomparable Washington connections? Downright presidential connections, in fact (and even they couldn’t save the firm). Now that Lehman’s North American core has been acquired by Barclays Capital (BCS), they remain:

- Hank Paulson’s younger brother, Dick Paulson, spent 18 years at Lehman. He’s still in the Chicago office, now as a Barclays Capital SVP in fixed income.

- Ted Roosevelt IV, great-grandson of President Theodore, is a managing director in investment banking at Barclays Capital. He held the same position at Lehman, having started at the firm 36 years ago and rising to head its financial products and derivatives units during the ’90s. Most recently he oversaw Lehman’s Council on Climate Change.

- Ted Roosevelt V – a chip off environmental Ted IV and great-great-grandson of President Teddy – is also a Lehman alum and now an SVP in fixed income at Barclays Capital. He got married two days before Lehman collapsed into Chapter 11 bankruptcy.

- George Herbert Walker IV, President Bush’s second cousin, was global head of asset management at Lehman, having joined from Goldman Sachs (GS) in 2006. In September, when Lehman agreed to sell its asset management unit, including Neuberger Berman, to Bain Capital and Hellman & Friedman for $2.15 billion, Walker agreed to go with the deal. He’s now CEO of Neuberger Investment Management, now owned by private equity.

- Jeb Bush, the President’s brother and former Governor of Florida, was a senior adviser for Lehman’s private equity arm. He parted ways with Lehman around the time of the bankruptcy.

Meanwhile, another former Lehman exec who is less well-known but was the fascinating subject of my 2007 Fortune profile, “The Spy Goes to Wall Street,” has left Barclays. Jami Miscik, who was global head of sovereign risk at Lehman and then at Barclays, is in Washington now, helping Barack Obama line up his new national intelligence team. Having headed the CIA’s intelligence directorate pre-Lehman, she could land back in government. The smarter bet is, though, that Miscik will resurface in New York to help a financial-services firm navigate geopolitical risk worldwide. For all of Lehman’s missteps, the firm managed geopolitical risk better than many others, and much of the credit for that goes to Miscik.

And whatever happened to CEO Dick Fuld? Almost every day, I’m told, he is in his 45th floor office in the Time & Life Building (the same building that houses Fortune). Fuld is working on the disposal of Lehman’s remaining assets – which, in this awful market, is some kind of penance for bringing down the house of Lehman.