Paulson Says U.S. Was ‘Close’ to Financial Collapse

Michael McKee and Peter Cook
Bloomberg
Tuesday, February 2nd, 2010

The U.S. economy came “very close” to collapsing into a second Great Depression and the government had no alternative to bailing out financial firms, former Treasury Secretary Henry Paulson said.

“There was a time when the credit markets had essentially frozen and when blue chip industrial companies were having trouble raising money,” Paulson said in an interview today on Bloomberg Television. “I knew then we were on the brink.”

“We easily could have had unemployment of 20 percent,” he said. “That would have meant millions of additional jobs lost, millions of additional homes lost, trillions more lost in savings. It would have been terrible.”

Paulson, who has just published his memoir, “On The Brink,” said he understands the criticisms of the bailouts of financial institutions such as Bear Stearns Cos. and American International Group Inc.

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