Paulson now acknowledges, as some in the room suspected, that the government was more amenable to funding a rescue than it let on.
Already, Serbia has turned to the International Monetary Fund for a rescue package, and its neighbors could soon follow.
Greece narrowly staved off bankruptcy after the other countries in the 16-nation group that uses the euro agreed, along with the International Monetary Fund, to a rescue package of as much as $160 billion late last month.
The biggest creditor remains the state-owned Pension Protection Fund (PPF), which is lined up to take on the £571m deficit in BHS's pension fund unless a rescue deal can be secured.
"They have really sharp teeth and jaws to crack nuts," said Rita McMahon, the director of Wild Bird Fund, a wildlife rescue center on Manhattan's Upper West Side.
"There is no power that can bend the IMF," it goes.But a second difficulty was Mrs Merkel's decision to reopen the deal struck just days earlier by finance ministers on how to fund a permanent rescue mechanism for the euro zone.
Finance ministers from the 17 eurozone members held talks for about four hours on Monday, which largely focused on how to fund a potential rescue for the island.
Even so, the fund sent a team to Iceland early this month and the decision by the fund to approve a rescue plan for Iceland appeared to be the breakthrough that allowed other central banks to join in supporting the country.
A fund rescue poses an affront to European pride, given the United States' important role in the fund.
Parent company the Co-operative Group lost control of the bank to a group of US hedge funds that launched a rescue deal in December.
The organization receives allocated funding to conduct a rescue.
