US finances 'are sound' - Treasury
Americans can remain confident in the "soundness and resilience" of the United States' financial system, Treasury Secretary Henry Paulson has said.
Briefing reporters at the White House, Mr Paulson said he "never once" considered it would be appropriate to put taxpayer money at risk to resolve the problems at Lehman Brothers.
The fourth largest US investment bank has filed for bankruptcy protection.
Starting on Friday, Mr Paulson participated in three tense days of negotiations at the New York Federal Reserve Bank in which he held firm to the position that the US government would not step in and supply any money to resolve the crisis at Lehman.
Faced with the prospect of no government help in dealing with Lehman's huge losses on its mortgage holdings, other financial firms lost interest in trying to buy the venerable firm.
That forced New York-based Lehman to file for bankruptcy protection, making it the largest bankruptcy in history in terms of assets, surpassing the failures at Worldcom and Enron earlier in the decade.
Mr Paulson explained his decision by telling White House reporters he did not "take lightly" any decision to put taxpayer money at risk to prop up a private company.
"Moral hazard is something I don't take lightly," Mr Paulson said, referring to the belief that when the government steps in to rescue a private company it encourages other companies to engage in risky behaviour.
"I never once considered that it was appropriate to put taxpayer money on the line in resolving Lehman Brothers," Mr Paulson said.
