Last Updated Feb 1, 2010 10:53 AM EST
Paulson, who served under former President Bush from 2006 to 2009 and was succeeded by President Obama's appointee Tim Geithner, was ultimately responsible for most of the bailout decisions that left taxpayers on the hook for billions of dollars in TARP funding. While he admits that he, Geithner and the rest of the decision makers were flying by the seats of their pants, blissfully unaware of the housing bomb, he doesn't apologize for the choices he made during the September 2008 crisis when Lehman Brothers collapsed and American International Group almost followed.
One can view Paulson's book as a manual on crisis management, spiced up by his personal and once-private revelations on how he prayed during tense meetings and how he flushed sleeping pills down the toilet rather than violating his Christian Science principles.
But Paulson's most important message is the same one that Geithner, former New York Insurance Commissioner Eric Dinallo and everyone else who sat in that room has said: "We had to. There was no choice. The alternative was economic collapse, another Great Depression, and 25 percent unemployment."
Others, most notably Special Treasury Department Inspector General Neil Barofsky, don't agree. They think the crisis could have been handled better, particularly when it came to negotiating with the banks paid off by the pass-through of AIG's taxpayer-funded bailout, which provided big payoffs for financial giants like Goldman Sachs, Deutschebank and Merrill Lynch.
And that is Paulson's Achilles Heel. Since he was Goldman's CEO for many years, many, including some congressmen, see Goldman's fingerprints all over the bailout. For some, the $13 billion that Goldman got, and the bonuses paid to its executives, is evidence enough.
Paulson's response: even giants can fall and their collapse can also hurt the little people. "AIG insured thousands of 401k programs," he told CNBC. At the time, Paulson had just presided over the collapse of Lehman Brothers where no one, including British bank Barclays, had stepped up to the plate to save it. Who could save the even larger and more complex AIG? Only one entity could, the U.S. government.
The coulda-woulda-shoulda of this crisis will be debated for years, or at least until there's a recovery and people make different mistakes. But clearly Paulson, a man of no small ego, is taking a lot of the credit for averting this one.