Transcript: Charlie Gibson Interviews President Bush

Dec. 1, 2008— -- The following is an excerpted transcript of Charlie Gibson's interview with President George Bush and First Lady Laura Bush at Camp David, on their reflections over the past eight years, the current state of the country and their greatest disappointments and accomplishments, for "World News."

CHARLIE GIBSON: Mr. President, let's start with the economy because it's what's on everybody's mind. Your successor will inherit not just a troubled economy, but an economy in crisis. Did you miss any signals that this would --

PRESIDENT GEORGE W. BUSH: You know, we anticipated some issues revolving around Fannie Mae and Freddie Mac, and early in my administration called for a regulator, on the knowledge that an implied government guarantee could cause, and eventually did cause, the agency to become excessive in its lending practices, which eventually was a part of the financial meltdown.

And I can remember sitting in the Roosevelt Room with Hank Paulson and Ben Bernanke and others, and they said to me that if we don't act boldly, Mr. President, we could be in a depression greater than the Great Depression.

GIBSON: When was that?

BUSH: That was, I would say, five weeks, four weeks after we began to deal with some -- like AIG. And that was right before we went to Congress for the $700 billion. And my attitude is, is that if that's the case, this administration will do everything we can to safeguard the financial system. And that's what we've been doing.

And I'm sorry it's happening, of course. Obviously I don't like the idea of people losing jobs, or being worried about their 401Ks. On the other hand, the American people got to know that we will safeguard the system. I mean, we're in. And if we need to be in more, we will.

And eventually, however, this economy will recover. And when it recovers, many of the assets backed by the government now will be redeemed, and we will -- could conceivably make money off of some of the holdings.

GIBSON: But was there an "uh-oh" moment -- and I could probably use stronger language than that -- (laughter)-- when you thought this really could be bad --

BUSH: Well, that was, of course, the crystallization. When you have the Secretary of the Treasury and the Chairman of the Fed say, if we don't act boldly, we could be in a depression greater than the Great Depression, that's an "uh-oh" moment. But you got to understand, leading up to that we had been bailing water in this way: AIG was failing; other big houses on Wall Street needed to be merged, one failed --

GIBSON: Was not saving Lehman a mistake?

BUSH: We'll let the historians look back on that. At the time, the recommendation was not to, obviously. And some are second-guessing that. And in a situation like this, Charlie, where the administration is making big decisions and big calls, that there's going to be a lot of second-guessing. The one thing that I don't want to have happen is people say this thing was in a financial meltdown and we didn't do anything. And so we're moving -- hard.

GIBSON: When you add it all up, you've got about $7.5 trillion in funded and unfunded backing of securities now.

BUSH: Yes.

GIBSON: And that's about half of what our economy is in its whole. Does that scare the willikers out of you?

BUSH: What scared me is not doing anything, which would have caused there to be a huge financial meltdown and the conceivable scenario that we'd have been in a depression greater than the Great Depression.

On the other hand, a lot of the -- you know, these -- some of these are investments. I've got faith that the economy will recover. As a matter of fact, I'm confident it will recover. I can't tell you exactly the moment, but when it does recover, a lot of the assets now owned by the government will be sold. And I can't guarantee that we'll get all our money back, but it's conceivable we could.

And the question is, is it worth it to save the system, to safeguard the system? And I came to the conclusion, along with other smart people, that it is.

GIBSON: Do you feel in any way responsible for what's happening?

BUSH: You know, I'm the President during this period of time, but I think when the history of this period is written, people will realize a lot of the decisions that were made on Wall Street took place over a decade or so, before I arrived in President, during I arrived in President.

I'm a little upset that we didn't get the reforms to Fannie and Freddie -- on Fannie and Freddie, because I think it would have helped a lot. And when people review the history of this administration, people will say that this administration tried hard to get a regulator. And there will be a lot of analysis of why that didn't happen. I suspect people will find a lot of it didn't happen for pure political reasons.