Paulson: I'd Do It All Again

Treasury secretary defends his actions in Times sit-down
By Kevin Spak,  Newser Staff
Posted Oct 23, 2008 7:47 AM CDT
U.S. Secretary of the Treasury Henry Paulson Jr., speaks during the National Committee on U.S.-China Relations gala dinner on Tuesday, Oct. 21, 2008 in New York.   (AP Photo/Julie Jacobson)
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(Newser) – Does Henry Paulson have any regrets about his widely-panned handling of the financial crisis? “I could have seen the subprime problem coming earlier,” he allows, before quickly adding, “I’m not saying I would have done anything differently.” Critics see things differently, of course, so Paulson sat down with the New York Times to defend his actions, including allowing Lehman Bros. to fail and pushing the original controversial bailout.

On Lehman, Paulson insists his hands were tied, because Lehman didn’t have enough collateral for a Fed loan. Nor does he regret pushing his original asset-based bailout plan, as opposed to the equity-based approach that later calmed markets. The asset-backed plan had long been in the works, while the direct capital approach seemed politically impractical. “We want to put equity in, but we don’t want to nationalize the banks,” he explained. “And I don’t know how to sell that.”