When the Federal Reserve helped push through a deal in March that saved Bear Stearns from filing for bankruptcy, did the central bank also ensure that Lehman Brothers would eventually fail?

The Fed's justification for the deal that sent Bear under the protective arms of J.P. Morgan Chase and put $29 billion of Bear's assets on the Fed's balance sheet was that markets were too jittery to handle a failure of the size of Bear. Had the government not intervened, the consequences could have been dire, Fed officials warned.

"Our judgment was that, had Bear Stearns been allowed to walk into bankruptcy court, that would have disrupted the financial system and had very serious effects on the economy," Federal Reserve Vice Chairman Donald Kohn testified in June.

But critics have accused the Fed of encouraging banks to maintain the status quo and not face up to the fact that their balance sheets were in need of a Clorox treatment. If institutions didn't acknowledge the exposure they had to falling real estate prices, more trouble was surely on the way.

Fast-forward six months and that's basically what happened with Lehman Brothers: Shortly after the Bear Stearns rescue, Lehman's chief executive Dick Fuld said that the worst of the credit crunch was over and only last week announced a major restructuring. But it was too little, too late.

"When you intervene, you think you're buying time for other firms to adjust, but you may actually only be buying time for management to delay," says Vincent Reinhart of the American Enterprise Institute and a former Fed economist.

Writing on the Economist's View blog, the University of Oregon's Tim Duy agrees: "Fed officials likely now understand the can of worms they opened with the Bear Sterns bailout."

That can of worms goes by the name of moral hazard, the risk faced by insurers that the protection they offer will lead parties to take on more risk. In the case of Lehman, the hazard was that the firm wouldn't shed its already high risk levels. If the Fed was willing to save a smaller firm, why not the larger Lehman?

"They had to draw the line somewhere," says Reinhart. "The government can't have an open backstop for financial firms."

The Fed had hoped that a combination of a Bear rescue and opening up access to its discount window for investment banks would calm markets and save the economy from a serious downturn. And it seemed to have worked, but only for a short while as it became clear that liquidity constraints weren't the problem, it was financial firms' solvency that was the main issue for investors and counterparties. There wasn't much the Fed could do about that.

With the decision by the Treasury Department and the Fed this weekend to not use taxpayer money to prop up Lehman, it seems that the government has gotten out of the bailout game it introduced with Bear. But the Fed also signaled that liquidity was still a concern and expanded the type of collateral it would accept from borrowers.

It's still too early to tell if the government's move will ease credit conditions. Early indications are that short-term funding could be tight: The federal funds rate shot up to 6 percent for a time today—the target rate is currently set at 2 percent. Another key measure of how willing banks are to lend to each other spiked, but in a possibly positive sign for markets, it stayed below levels reached earlier this year.

One thing that is clear is that most analysts expect more failures to be on the way. Will the government stand the ground it staked out this weekend and not open the public wallet? The move today to allow troubled insurer American International Group to borrow from itself seems to point in that direction.

But with the flip-flopping that's happened in both the Bear-Lehman situation as well as the rescue of Fannie Mae and Freddie Mac—even after the government said that the two mortgage giants wouldn't need public intervention—has left markets unsure about the Fed's commitment to its new harsh stance.