"The British screwed us!"

In his new book, "On the Brink", former Treasury Secretary Hank Paulson blames the British Financial Services Authority for not allowing Barclays to buy Lehman in its dying moments.

He writes:

"The British screwed us," I blurted out, more in frustration than anger. I'm sure the FSA had very good reasons for their stance, and it would have been more proper and responsible for me to have said we had been surprised and disappointed to learn of the UK regulator's decision, but I was caught up in the emotion of the moment.

Alistair Darling, Paulson's counterpart across the pond, claimed that the deal was disapproved because the risk of taking on Lehman was far too great for the British government, and because they didn't want to pass on that risk to their taxpayers.

Having felt the dire consequences of Lehman's failure worldwide, would the British have been better off in allowing the Barclays-Lehman deal to happen - thus putting immediate pressure on their taxpayers - or did they in fact screw themselves and everybody else by letting it go bankrupt? Also, is Paulson justified in blaming the UK even though he initially failed to orchestrate a solution for Lehman at home?