Hank Paulson warns of regulatory conflict Hank Paulson has warned that competing financial regulations could "devolve into financial protectionism," serving narrow national interests of companies and regulators while hurting the public. The former US Treasury secretary said reforms put in place after the 2008 crisis could lead to "walling off markets, constricting cross-border access to capital and conflicting requirements for global firms" while supporting "regulators, exchange, clearing houses or national financial institutions." The five years following the crisis have been marked by a global overhaul of the rules of finance. But from capital requirements to derivatives trading, heated disagreement persists between the US and Europe. Mr Paulson, who was chief executive of Goldman Sachs before joining the Treasury under President George W Bush in 2006, said he approved of the sharp increase in US capital requirements enforced by the Federal Reserve. "I'm very unsympathetic to those who think the capital requirements are too high for the large institutions," he told the Financial Times, adding that he liked the capital surcharge imposed on the biggest banks, including Goldman and JPMorgan, which has been resisted by the industry. He said he was "much more concerned" with the repo market, which investment banks use to fund their operations. Mr Paulson finds himself drawn back to the crisis that reached its apex five years ago this week: he has updated his book about his role and stars in a new documentary on those dramatic days. He has also been dragged into a legal dispute over whether shareholders in AIG were mistreated when the government bailed out the failing insurer in return for an 80 per cent equity stake. He said he could not comment on the suit. But he did have a phrase for those who criticised him for other elements of his crisis response, such as not tracking every dollar invested to save the teetering US banks: "It's asinine." Those critics include Elizabeth Warren, the Democratic senator, who recently helped scotch the potential nomination of Larry Summers to the Fed. Mr Paulson drew a distinction between the US bailouts and those of Europe, saying that "moving quickly to put capital into hundreds of banks, some under duress and some not, differentiated us from Europe." In other areas of US policy, Mr Paulson expressed frustration. He said his move to seize Fannie Mae and Freddie Mac, the mortgage finance companies, and place them in government conservatorship had proved to be right. "I think it could have been a disaster," he said, if the companies, which guarantee US home loans, had been allowed to fail, and house prices could have suffered a more severe fall. But he expressed dismay that the temporary fix had been allowed to fester, with Fannie and Freddie still under government control and 90 per cent of the housing market now backed by them and other official entities. He also celebrated the government's intervention in money market funds and said "it concerns me a lot" that the Treasury was later prohibited by law from similar rescues in the future.