On the Brink, By Hank Paulson

The US Treasury Secretary defends shutting Lehmans

"The British screwed us." Yes, they did, Hank. Alistair Darling had just told Paulson, the US Treasury Secretary, that his plan to get Barclays to buy the doomed Lehman Brothers in September 2008 was being vetoed. Yet, had it happened, we now know, it would have been the British taxpayer who got screwed. (Mr Darling can thus look back with some satisfaction on his time at the Treasury, for saving the nation from an even greater financial catastrophe. Not that the voters will thank him.) Actually, Paulson's words come out rather differently in another account of the great financial crisis, Too Big To Fail, in which Andrew Sorkin has Paulson using the more evocative "the British have grin-fucked us". Darling had told Paulson about a week before that he had "some concern" about Barclays buying Lehman Brothers, but Paulson had failed to factor in Darling's gift for understatement. Thus was the most devastating financial failure of the past century framed – out of a transatlantic misunderstanding. What was it that George Bernard Shaw said about two nations divided by a common language?

In contrast to the perfidious Darling, Paulson sees himself as a typically straight-talking, straight-dealing American; an archetypal football-playing Ivy Leaguer; a servant of Goldman Sachs for 32 years, with public service to two presidents – Nixon and George W Bush – bookending his investment-banking career; and a God-fearing Christian Scientist, too. After Mr Darling let him down, Paulson's wife – with no hint of irony – told him to pray. "'You needn't be afraid,' Wendy said. 'Your job is to reflect God, infinite Mind, and you can rely on Him.'" Thus fortified, Paulson rang Michael Bloomberg to tell him that Lehmans would file for bankruptcy that evening. But did he have to? While he details in this book the legal and political barriers to his having just gone ahead and rescued Lehmans, and asked questions later, the chances are that Paulson would have got away with it. Bush would have backed him, as would the Fed and Wall Street. That Paulson funked it was the greater error of judgment; Darling is simply his scapegoat. '

Even with the help of the Almighty, the crises that came so fast in the autumn of 2008 simply overwhelmed America's political system. In wartime and in foreign relations the president can act fast; on the economy – though the crisis may be of war-like proportions – he is hemmed in by fractious, cantankerous, stupid and self-interested congressmen. You have to feel sorry for Paulson when he is faced with such human and financial obstacles. It's understandable that he suffered so badly from "dry heaves" during the more terrifying moments. Paulson might look like a bullet-headed hardman, but he wasn't quite as tough as he looked – nor as the situation demanded.