Mr Paulson argues that the approach combines pragmatism with an intense focus on moral hazard, or letting people pay for failure.

ECONOMIST: Saving Wall Street

Banks are wary of moral hazard: if word spreads, borrowers with the ability to pay their mortgage may deliberately miss payments in order to get their loans adjusted.

ECONOMIST: Economics focus

Another hazard for public funds: A conflict of interest among some of the consultants whom they pay for advice on where to invest.

FORBES: OutFront