Paulson explains the reasoning behind the decision to bail out Wall Street insurance giant American International Group in his memoir, according to The Wall Street Journal.
"The intervention we undertook I would have found abhorrent at any other time," Paulson wrote, according to The Wall Street Journal. "As first responders to an unprecedented crisis that threatened the destruction of the modern financial system, we had little choice."
In contrast, the government did not have the legal authority to bail out the Lehman Brothers investment bank, Paulson wrote, and could not find a pre-bankruptcy buyer to save the bank, according to The Wall Street Journal.
Although he raised the possibility of an impending financial meltdown in August 2006, during his first meeting with former President George W. Bush's economic team, the collapse of AIG caught Paulson by surprise, according to The Wall Street Journal's report of his memoir.
Paulson wrote that he only realized the significance of the problems facing the company the weekend before the bailout, and that he had to convince Bush that saving AIG was the right decision, The Journal reported.
"[Bush] had a deep disdain for entities like [mortgage enterprises] Fannie [Mae] and Freddie [Mac], which he saw as part of a permanent Washington elite, detached from the heartland," Paulson wrote, according to the Washington Post.
Paulson admitted his failure to predict the housing bubble, a major cause of the financial crisis. He also wrote that he regretted declaring in April 2007 that subprime mortgage problems were "largely contained," The Journal reported.
In the memoir, Paulson wrote that Russia urged China to employ a "disruptive scheme" of dumping Fannie Mae and Freddie Mac bonds in order to force a bailout of the mortgage-finance companies, but the Chinese refused, according to Bloomberg. Dmitry Peskov, a spokesman for Russian Prime Minister Vladimir Putin, denied the assertion, according to Bloomberg.
"The report was deeply troubling heavy selling could create a sudden loss of confidence in the [Government Sponsored Entities] and shake the capital markets," Paulson wrote, according to the New York Post.
The memoir details Paulson's opinions on other Washington officials and politicians involved in addressing the financial crisis, the Washington Post reported. The former treasury secretary praised the reaction of some decision-makers, including President Barack Obama and Treasury Secretary Timothy Geithner '83, but found fault with several other officials, including former Alaskan Gov. Sarah Palin and Sheila Bair, the chairman of the Federal Deposit Insurance Corporation, according to the Washington Post.
Paulson referred to Bair's assertion that Citibank's failure would not constitute a systematic risk as "simply posturing," the Post reported.
Paulson also wrote about his personal life, including his relationship with his wife, Wendy, and his Christian Scientist faith, The Journal reported.
On the weekend of Lehman Brothers' collapse, Paulson telephoned his wife and told her that "everybody is looking to me and I don't have the answer," according to The Washington Post.
"You needn't be afraid," she answered. "Your job is to reflect God, Infinite Mind, and you can rely on Him."
Paulson and Business Plus, Paulson's publisher, did not respond to requests for comment by press time.
