Paulson: 'We desperately need regulatory reform'

Former Treasury Secretary Henry M. Paulson today said that last-minute authority given to the Treasury Department by Congress to save failing financial institutions probably averted another Great Depression. Speaking at Pershing LLC's national conference for RIAs and correspondent firms in Hollywood, Fla., Mr. Paulson lamented the fact that the Treasury and Federal Reserve had limited power to deal with failing brokerage firms. "If I had stood up [in 2008 and publicly] said, ‘We have no authority to deal with an investment bank,’ Morgan Stanley would have gone down, and if Morgan Stanley, then [The] Goldman Sachs {Group Inc.]" could have been next, he said. "We desperately need regulatory reform … so any institution regardless of size can be liquidated," said Mr. Paulson, who was interviewed by Ted Bragg, a managing director at Pershing. Mr. Paulson said that the hardest thing about dealing with the financial crisis was the "beating" he took from critics after leaving government. Efforts to stabilize the system were hampered by congressional pressure for the banks to lend more and control executive compensation, he added. Being Treasury secretary during the crisis "was a miserable experience [but] I'm glad I did it and I'm glad it's over," Mr. Paulson said to applause from the audience. Mr. Paulson, the former chief executive of Goldman Sachs, said he opened an office last week in his native Chicago where he will work full-time on environmental and conservation issues.