Did Hank Paulson Break the Law?

You would not know most examples because they remain off the "radar". I can offer a few for instances. Woot.com http://www.inc.com/inc5000/2008/company-profile.html?id=200800250 This year they will do about $250-million. Very tightly run. About 1/2 the companies ultimately acquired by Google started out as private companies. There is no way to do an apples-to-apples comparison. But there are ways to compare. Take a sampling of private companies who were recently bought by public ones, or, did an IPO and went public. The results are very common. Loss of efficiency followed by loss of profitability. Examples: Bidz.com (a train wreck); Starboard Cruise Services was a model private enterprise until it was acquired by LVMH (Paris) (for 6 times its book value). They have since lost so much money that LVMH had to sell its 40% stake in Gucci to pay the bills. When large banks acquire small banks, its even worse. MBNA went from being the most consumer friendly credit card company in the USA to being among the sleaziest, next to Bank of America (who owns it). The numerous banking chains who were acquired by B of A were like out of a Douglas Fairbanks Jr. movie. B of A's strategy was simple though diabolical. They purchased smaller regional chains located in areas with high levels of affluence. Thus, the collateral they acquired was greatly under valued against the loans they had outstanding. This allowed them to "slash-and-burn" the acquired customers, who were then (often) locked into the relationships or at least, it became difficult to find alternate banks (who had not already been purchased either by B of A, Chase, Wachovia, etc..)
Budget deficits favor large public companies because they never seem to have any problems borrowing money. In fact, the FDIC guidelines for evaluating loans are remarkably different between public and private owners (guess who's easier to comply with). Public owners can also engage in trickery not available to the private company. For example, following a merger, the new (combined) entity can pick-and-choose which accounting principles it retains from each of the merged companies, thereby hiding weak financials.
Large corporations often have significant amounts of leased (or owned) space which is unoccupied. They have execs earning 6-figure salaries who have no job descriptions. They use the borrowed capitol to purchase their competition, eliminate jobs (those employees who actually work for a living) and then they raise their prices or lower their quality (often both). They use their financial power to influence our elected government, often contributing to both parties in every reliant election. As earlier mentioned, large litigators not only have the juiced-up law firms on their retainer but sometimes the judges as well. I can show you a point-blank example where Bank of America's law firm had a federal magistrate as a paid "key-note" speaker. This judge issued an injunction against one of B of A's opponents which barred him from filing any papers with any court(s), without the advance permission of this same magistrate. The injunction was eventually overturned at the Circuit court level but only because it was so brutally absurd. There were many other decisions which were improper but affirmed by the same court of appeals. The bankruptcy court is even worse, mainly because it is considered an "equity court" where the judge is given enormous latitude. So bad that the rest of the legal profession refers to it as "the whore's court". We are living under tyranny. But we are like the proverbial frog, sitting in a pot of water slowly being heated. Admit it or not, you are a frog too. But I digress.
When private companies need to borrow money to compete with their public rivals, the giant budget deficits make this next to impossible. The government has borrowed all the cash to do the bidding of the giant corporations. When (for a few years) we had a budget surplus, the banks had no choice but to treat their borrowers fairly, which included individual people as well.