According to the Washington Post, at the time that Lehman Brothers was teetering on the verge of collapse, Secretary Paulson warned of the dangers of repeatedly offering government guarantees to companies. Just three days before Lehman failed, Paulson reinforced the point, telling reporters and Wall Street executives that no government money would be used to save the 158-year-old investment bank.

But shortly thereafter he engineered a series of massive federal intrusions into the markets. He...