More than a year after the collapse of Lehman Brothers, former Treasury Secretary Hank Paulson admitted that saying the bank would not get a government bailout was a ploy in the negotiations over the failed institution.
Paulson spoke with CNBC Monday with the release of his new book on the financial crisis, "On the Brink: Inside the Race to Stop the Collapse of the Global Financial System."
Playing Chicken With the Bankers
Before Lehman's collapse in 2008, Paulson had told CNBC that there would be no government bailout. However, he said Monday that the statement was just part of the overall strategy to try and save the bank.
"That was a tactic ... If we had had a situation where we had a buyer that could've done that ... and there was a way that the Fed could have done something similar to Bear Stearns ... my judgement is we would have made the decision to do what we'd done with Bear Stearns, because Lehman — the system was so fragile that I may not have known that the results were going to be as disastrous as they were."
—Paulson
Blame Goes With Making Economic Policy
"It's not about fairness or unfairness. If you're a leader, and a strong leader, during a difficult time like a crisis, there's always going to be a little bit of flack. Those who are in the top economic jobs when the economy isn't doing well, regardless of what hands they've been dealt, are always going to draw a certain amount of controversy."
—Paulson
A 'Heated, Intense Moment' Over Barclays
"When I went down and met with the bankers afterwards and told them the deal [for Barclays to acquire Lehman] was dead, I told them 'the British screwed us' ... That's really pretty unfair when you look at how fragile their system was and the questions that they must have had about Barclays and capital-raising plans and risks that would have gone along with acquiring Lehman ... It was a heated, intense moment, and I hadn't had a lot of sleep, and I went from the brain to the mouth."
—Paulson
Allowing More Banks to Fail Would Have Been an 'Economic Disaster'
"Everything bad that could happen was happening … the regulators, we all felt that there was a real chance that Morgan Stanley might go down, and if they went down it could very well take down Goldman and the whole system. And of course what we cared about was then there'd be a meltdown, and what the impact would be on the American people. It just would have been an economic disaster."
—Paulson