ABC News Exclusive: Transcript of Betsy Stark's Interview With Treasury Secretary Henry Paulson

Nov. 30, 2007— -- Below is the excerpted transcript of Treasury Secretary Henry Paulson's interview with ABC's Betsy Stark, Friday, Nov. 30, for "World News With Charles Gibson."

Betsy Stark: How confident are you that there will be an agreement between the administration and the mortgage industry to freeze mortgage rates for some subprime borrowers?

Henry Paulson: Betsy, I'm optimistic we'll have an agreement soon. And this is a very important initiative and it's something that the mortgage industry very much wants to do.

Stark: Is this a government bail-out?

Paulson: No, it certainly isn't. There's no government money in this.

Mortgage foreclosures are not good for lenders and for investors. It's just not a good thing. And they will always do everything they can to avoid foreclosure if they're able to do so. And so what we're doing is bringing people together to help avoid foreclosures.

Stark: Why this more proactive intervention now?

Paulson: If there was ever a role for government, Betsy, it's to help facilitate a solution when innovation has outrun the private sector's ability to deal with it. And there's been a lot of innovation and complexity in the mortgage market and we need to do everything we can to help get the industry ready to meet the growing number of resets that are going to be coming in the sub-prime mortgage market.

Stark: What can't the industry accomplish without the government?

Paulson: I think industry is accomplishing this. Remember, the government's role is playing a facilitator here.

The mortgage industry wants to and needs to be able to come up with a way to help those sub prime mortgage borrowers who are facing resets that won't be affordable for them.

Now, there are going to be some sub prime mortgage borrowers ? a matter of fact, many ? that aren't going to have a problem. And, Betsy, there are going to be some that we're not able to help. Maybe they didn't make a down payment. They don't have the ability to afford any reasonable mortgage.

So we're focused on those in the center ? the middle group ?