Paulson regrets mistakes on US economy

"We're not proud of all the mistakes that were made by many different people, different parties, failures of our regulatory system, failures of market discipline that got us here," Paulson said in an interview on Fox Business Network Thursday.

But he said he had "no regrets" about the steps the government is taking now to address the problem.

"We will mitigate the impact on the real economy and we'll get this financial system working again," he said.

Paulson rejected criticism about the new approach the government announced on Tuesday to have the government purchase $US250 billion ($A384.38 billion) in stock from private banks, in effect partially nationalising the banking system.

He said the initial stock purchases would total $US125 billion ($A192.19 billion) with the money going to the nine largest US banks, whose executives were summoned to a meeting with Paulson at the Treasury on Monday where he applied pressure to make sure they all participated.

Paulson said it was essential that the nine banks, which hold 50 per cent of the US bank deposits, participate so that there would not be a stigma attached to the program. He said it would encourage other banks who were in greater need of capital to take part.

"When there's fear in the marketplace and there's concern in the marketplace, no one wants to raise their hand and say, I need capital," Paulson said.

Paulson said there had been interest "from a good number of other banks" for the other $US125 billion ($A192.19 billion) the government has to spend to purchase bank stock. Potentially thousands of banks could be eligible for a portion of those funds.

The $US250 billion ($A384.38 billion) is part of the $US700 billion ($A1.08 trillion) bailout program for the financial system that Congress passed on October 3 in an effort to get banks to resume more normal lending.