Bailout Report

After two months without a day off, Treasury Secretary Hank Paulson sat for several press interviews this week.  Notably with the New York Times and Charlie Rose, both of which focused on whether letting Lehman Brothers fail was a mistake and whether the direct investments in banks was a late response to Europe’s first move in that regard.

As for Lehman, Mr. Paulson insisted that it was “a symptom and not a cause” of the financial meltdown that took place in recent weeks. The real problem, he contended, is that banks all over the world made wrong-headed loans that have now come back to haunt them. After meeting recently with European central bankers, he said, “the thing that took your breath away was the extent of the problem. Look at country after country that said they didn’t have a problem, and it turned out they had a huge problem.”

Mr. Paulson added, “No one will, 10 years from now, write the story that this crisis was about Lehman Brothers going down.”