"We're working through a difficult period in our financial markets right now as we work off some of the past excesses," said Paulson in a press conference in Washington. "But the American people can remain confident in the soundness and the resilience of our financial system."
Paulson's comments came as Lehman Brothers (LEH, Fortune 500) is filed for the biggest bankruptcy in history after it failed to find a buyer, triggering a 94%stock plunge to 20 cents a share.
Paulson said times have changed since the government brokered the March bailout of Bear Stearns, and that he never considered that type of support for Lehman.
"I never once considered that it was appropriate to put taxpayer money on the line when it came to Lehman Brothers," said Paulson, a former chairman and CEO of Goldman Sachs.
But he didn't rule out future bailouts in the financial services industry. When a reporter asked Paulson if there would be "no more" bailouts, he replied: "Don't read it as no more. Read it as that ... it's important, I think, for us to maintain the stability and orderliness of our financial system."
Paulson said the finance industry's woes stemmed from the "housing correction," which would take another few months before it reached its peak.
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