Paulson says he feared run on dollar at start of crisis -FT

LONDON Jan 31 (Reuters) - Former U.S. Treasury Secretary Henry Paulson feared there would be a run on the dollar during the early stages of the financial crisis when attention was focused on the United States. "It was a real concern," Paulson says in an interview in Monday's edition of the Financial Times. A dollar collapse "would have been catastrophic," he said.

"Everything that could go bad did not go bad. We never had the big dislocation of the dollar."

The dollar in fact rallied as the financial crisis escalated with the collapse of U.S. investment bank Lehman Brothers in September 2008 and became a global crisis.

Paulson said he feared that, when Lehman Brothers collapsed, speculators could bring down U.S. investment bank Morgan Stanley and that his old firm Goldman Sachs would follow.

"Banks were going down like flies," he said.

U.S. authorities lacked key tools to deal with the crisis, notably a controlled bankruptcy regime for nonbank financial companies, he said. (Reporting by Susan Fenton, editing by Martin Golan)