Third, whether the quote is “screwed” or “grin-fucked,” the passage implies that the British government backed out on some sort of commitment. But that commitment is never established in the passage, nor does anyone ask Alistair Darling, the British finance minister who is quoted, what he thinks happened. If you read carefully, Paulson never actually says British regulators had ever agreed to a deal in principle, either to him or even to Barclays. Emphasis is mine:

Tim [Geithner, natch] spoke with [Barclay’s President Bob] Diamond after the Barclays board meeting, at 7:15 a.m. New York time, and Bob warned him that Barclays was having problems with its regulators. Forty-five minutes later, I joined Tim in his office to talk with Diamond and [Barclay’s CEO John] Varley, who told us that the FSA (Financial Services Authority of the U.K.) had declined to approve the deal. I could hear frustration, bordering on anger, in Diamond’s voice.

We were beside ourselves. This was the first time we were hearing that the FSA might not support the deal. Barclays had assured us that they were keeping the regulators posted on the transaction. Now they were saying that they didn’t understand the FSA’s stance. At 10 a.m., we met with the bank chiefs again, and I told them we had run into some regulatory issues with Barclays but were committed to working through them. The CEOs presented us with a term sheet for the deal. They had agreed to put up more than $30 billion to save their rival. If Barclays had committed to the deal, we would have had industry financing in place.

What seems to have happened is that Barclays believed the FSA was on board, or at least Paulson says Barclays led him to believe that. The question is what was the basis for that belief?

A bit more:

At 11 a.m., I went back upstairs, and soon got on the phone with (British Finance Minister) Alistair Darling, who wanted a report on Lehman. I told him we were stunned to learn that the FSA was refusing to approve the Barclays’ transaction.

He made it clear, without a hint of apology in his voice, that there was no way Barclays would buy Lehman. He offered no specifics, other than to say that we were asking the British government to take on too big a risk, and he was not willing to have us unload our problems on the British taxpayer

The implication is that an apology is in order.

A paragraph later comes the “screwed” line, which is followed by a disclaimer of sorts:

I’m sure the FSA had very good reasons for their stance, and it would have been more proper and responsible for me to have said we had been surprised and disappointed to learn of the UK regulator’s decision, but I was caught up in the emotion of the moment.

This is the point where a response from Darling would be useful.

It strikes me that the Paulson excerpt appearing in this space is a journalism departure of sorts. I hope we know where we’re going.

If you'd like to get email from CJR writers and editors, add your email address to our newsletter roll and we'll be in touch.

Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.