'This Week' Transcript: Gov. Schwarzenegger

And of course, there is a good reason, because I think that no one really knows what's going to happen to the economy, 100 percent. I mean, you know, as you could see with the stock market, one day it's up 500 points, the next down -- it's down 500 points, and all of this. But I think that it is wise, and I have told our legislative leaders to plan for the worst.

STEPHANOPOULOS: President Bush, yesterday, gave a speech, where he warned against too much interference in the market.

PRESIDENT GEORGE W. BUSH: History has shown that the greater threat to economic prosperity is not too little government involvement in the market. It is too much government involvement in the market.

SCHWARZENEGGER: Well, the sad story, here, is that it was government that created the problem in the first place. And so I think that...

STEPHANOPOULOS: What do you mean by that?

SCHWARZENEGGER: I think that government is responsible to help. But then it depends to what extent.

Well, you know, I think that all the housing crisis, the mortgage crisis, and all of those things with Fannie Mae and Freddie Mac, and the way they were pushed to give everyone the chance to be part of the American dream.

It's a nice thing; it's wonderful to strive for everyone having -- being part of the American dream and have home ownership.

SCHWARZENEGGER: But you got to look at can people afford it? Who can afford it? You cannot go and give someone that has no, you know, proof of a regular income, and has no assets, and has no equity in the house, and just give them a loan, and just throw the loan after that person and hope for the best, just so that you can bundle up all those mortgage deals and sell them to someone else, and sell them to someone else, and sell them. So now we don't even know who owns what.

STEPHANOPOULOS: Yes, but those buyers and lenders bear responsibility for that too. Don't they?

SCHWARZENEGGER: No, everyone has a responsibility. Even the lender has a responsibility. Everyone was irresponsible. But I think that the whole push was -- on Fannie Mae and Freddie Mac was by government. And I think that we -- a big mistake was made in Washington by the very same people now that scream let's bail out and let's bail out. So I think, since government has already been responsible for creating this problem, I think that government is responsible to help along. And from then on, it is a matter of what is your definition of helping along? I think the key thing is no matter who you help, they themselves first, before you give them anything, have to show fiscal responsibility, and that they have to act together.

You cannot let them abuse the system. You cannot go and give corporate America and Wall Street and everyone these billions of dollars. And then they grab, millions of them, you know, pay themselves with the great benefits and all of this, and go off and have great vacations. That's not fair while someone else is getting kicked out of their home.

So we have to have a balance. And I think that, besides just making the decisions, you have to have great follow-through. And you have to have someone in charge that then goes and really does it the right way. Because it's always one thing to make the decisions, another thing to actually then execute that vision and that bailout all the way through.

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