While generally sure of himself and his decisions during the crisis, Paulson said, his biggest errors during his time in office were in communications. (He served as head of the Treasury Department from June 2006 to January 2009.
For instance, he says, rather than stressing how the $700 billion TARP (Toxic Asset Relief Program) funds were needed to ensure that a complete financial-market meltdown wouldn't happen, his message should have focused on how saving Wall Street was essential for preserving Main Street.
As Rep. Barney Frank told him, "You can't prove a counterfactual."
"I'm better speaking one on one or with small groups," Paulson explained.
During the Pershing session, Paulson answered questions from Ted Bragg, a Pershing managing director and fixed-income trading executive. Bragg principally asked Paulson questions based on issues and opinions shared in Paulson's recently published book "On the Brink."
The former Goldman Sachs leader described the government's decision to not rescue Lehman Brothers in 2008 as more of a non-decision. "We did not have the power to bail Lehman out," he said, "and we could not find the legal authority [or other ways] ... to guarantee the liabilities and to inject capital," he said.
As for short-term U.S. economic conditions, Paulson says the recovery is underway and that the system is stable. However, in the long term, the country needs to systematically address the imbalance between consumer saving and spending, as well as the government's structural deficit. "We have to limit and reform benefits," he said.
The political system makes this difficult, and hence, may need reform, as well. "Voters want benefits but don't want to pay for them," he said.
"We must deal with our problems," Paulson explained. "That requires strong leadership. We also need growth and jobs."
In terms of financial reform, Paulson says our priority should be on developing a "systematic risk regulator" that can intervene "when the system is threatened."
In addition, he is upbeat on the ability of Congress to pull together a constructive reform package by early July. "And I think Wall Street should accept it," he said.
Finally, Paulson congratulated financial advisors in their roles as the unsung heroes of the financial crisis of '08-'09. "At a time when regulators and others made plenty of mistakes, your work was heroic," he concluded.