Paulson: &#39;The British Screwed Us&#39;, I Wish I Had Saved Lehman

Hank Paulson

Hank Paulson emphatically explains that, deep down, he wanted to save Lehman Brothers, in his new book "On The Brink."

Problem was, doing so would have guaranteed the taxpayer a loss, which made any bailout beyond his legal powers.

Business Week: The government was able to facilitate the merger of Bear Stearns Cos., a failing New York investment bank, and JPMorgan Chase & Co. by having the Fed guarantee $29 billion of Bear Stearns’s assets. A similar rescue of Lehman proved impossible because a deal to sell the investment bank couldn’t be completed, Paulson wrote. The executives gathered at the New York Fed also concluded Lehman had overvalued its assets by at least $37 billion, he said.

“The toxic quality of Lehman’s assets would have guaranteed the Fed a loss,” Paulson 63, wrote, meaning the central bank couldn’t legally make a loan.

That was the first unfortunate problem. The next was that, simply put, 'The British' killed Lehman:

WSJ: As for the collapse of Lehman Brothers, Mr. Paulson stands by his position that the government had no legal authority to save the investment bank and couldn't find a buyer for the bank. He describes frustration with the U.K.'s Financial Service Authority, which was reluctant to approve a prebankruptcy deal for Barclays PLC to acquire Lehman.

"The British screwed us," Mr. Paulson said he blurted out when he learned the deal had fallen through.

Finally, it's always interesting to see that no matter how logical and analytical we may think we've become, in the end America's multi-billion-dollar bailout decisions were still influenced by a higher power. One always has to wonder what role tea leaves play in American government.

Mr. Paulson, a Christian Scientist, said his faith helped him through the crisis. During the weekend of Lehman's collapse, he called his wife, Wendy, and told her, "I am really scared." She said he shouldn't be afraid, that his "job is to reflect God, Infinite Mind, and you can rely on Him."

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