"I think in hindsight it's pretty clear that it was a drastic error to let Lehman go under," Cashin said on ABS' "This Week with George Stephanopoulis." The financial systems crisis quickly "went from Wall Street and the banks to Main Street and business and we could see more of that."

The signal that the markets were emerging from the morass would be "for things to calm down," he said.

"You've got to remember that the stock market is merely the sideshow," he said. "It's ... the banking system that's got to get put back together and it's got to get put back together fast."

Former Treasury Secretary Larry Summers, who served under President Bill Clinton, said it boiled down to trust.

"We've got a problem of trust -- people trusting their money and financial institutions, financial institutions trusting each other, the whole economy trusting the government policy framework," Summers said. "And anytime you've got a problem of trust, you've got to deal with it in a very aggressive way."