Former US treasury secretary Henry Paulson, saying nine of the country's banks were “central to any solution” of the credit crisis, told their management to take government aid or be forced to by regulators, according to a memo prepared for an October meeting seen by Bloomberg.

“If a capital infusion is not appealing, you should be aware that your regulator will require it in any circumstance,” Mr Paulson’s one-page list of talking points for the session with the banks’ chief executives was reported to read. “We don’t believe it is tenable to opt out because doing so would leave you vulnerable and exposed.”

The US government bailout of banks, many of which hold large wealth management operations, has been controversial because banks that received public funds have been placed under tighter government control over issues such as executive pay.

There are concerns that the bailout will permanently extend government control over the financial sector, breaking with the traditional free market model of the US economy. In the UK, meanwhile, bailouts of banks such as Lloyds and Royal Bank of Scotland have also been accompanied by government restrictions on remuneration.

Investing $125 billion in the banks was a shift for the previous administration, which had proposed buying troubled assets with $700 billion the US Congress approved 10 days earlier. The memo was among Treasury Department documents containing details about the 13 October meeting.

The US treasury did not return calls seeking comment, the news service said.